Bank of America sets expectations for Nvidia stock ahead of earnings

Bank of America sets expectations for Nvidia stock ahead of earnings

while NVIDIA (NASDAQ:NVDA) Still three weeks away from reporting its fourth-quarter earnings, Bank of America’s Vivek Arya, a 5-star analyst ranked in the top 1% of stock professionals on the Street, confidently expects Nvidia to post modest but still noticeable beats in… All of the fourth quarter of 2023. Its earnings and expectations for the first quarter of 2024.

Looking into his crystal ball, Arya first announced that Nvidia would report quarterly sales of $500 million to $1 billion in the fourth quarter, compared to the $20 billion sales called for by the Wall Street consensus. The analyst quickly moved into damage control for this supposed “rhythm,” however, opining like this: “A 3-5% win would pale against the 10%/22% rally/rise in previous quarters and probably disappoint some speculators.” On the rise.” But this smaller cadence of this magnitude is actually a good thing because it creates opportunities for Nvidia to continue to exceed expectations in the future.

Yes, you read that correctly. First, Arya says, there’s a consensus that Nvidia will sell $20 billion worth of computer chips. However, there also seems to be a consensus that Nvidia will sell much more than $20 billion worth of computer chips, so that if Nvidia sells only $21 billion (i.e. $1 billion more than the first consensus), some people will be disappointed that it didn’t that. ‘It does not exceed…the second consensus.

However, for Arya, he seems quite content with winning $1 billion. Since he already expects this to happen, he reaffirms his buy rating on NVDA stock and increases his price target by $100, setting it at $800 per share. This means a potential upside of approximately 21% from current levels. (To watch Arya’s record, click here)

So what is the source of all this optimism? By all accounts, Nvidia chips designed for AI functionality are selling like proverbial hotcakes, with Alphabet incorporating AI into search and putting AI on its mobile devices, Meta creating “new AI-based advertising tools,” and Microsoft crediting AI has been credited with creating six of It posted 18 percentage points of sales growth last quarter, and Nvidia itself has teamed up with everyone from Dell to HP to SAP to VMware on new partnerships.

Looking to 2025, Arya says Nvidia stock is selling for just 25 times the earnings it will make next year, despite growing its earnings at a compound annual rate of 45%, resulting in a PEG ratio of less than 0.6 per share — well below the PEG ratio. 1.0 PEG which is considered the touchstone for value investors.

Overall, Wall Street clearly likes what it sees here. The stock has 38 recent analyst reviews, including 34 Buy ratings versus 4 Reviews (i.e. Neutral), for a Strong Buy consensus rating. (be seen NVDA stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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