NVIDIA Corp (NVDA)

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Nvidia (NVDA) stock adds 2% as HSBC double upgrades to Buy on AI pricing power
By: Investing.com | April 18, 2023

HSBC analysts raised the recommendation on Nvidia (NASDAQ:NVDA) to Buy from Reduce as they believe the artificial intelligence (AI) opportunity “more than offsets our previous concerns over a datacentre slowdown and rising inventory levels.”

The analysts also more than doubled the price target on Nvidia stock to $355 (from the prior $175 per share). They admit they were wrong on Nvidia stock, hence the double upgrade call.

“We were too focused on the slowdown in datacentres, but what really surprised us was its pricing power on AI chips,” analysts wrote in a client note.

Despite a strong year-to-date (YTD) rally in Nvidia shares (+85%), analysts see ~35% upside potential from current levels. HSBC is 12%/18% above consensus in FY24e/FY25e, respectively, for EPS.

“We also acknowledge further re-rating potential on Nvidia’s market dominance (>80% market share) and the fact that it is a prime beneficiary of the AI trend. Hence, we raise our TP to USD355, from USD175 previously, based on a PE of 50x which is higher than one standard deviation above its 5-year average given compelling earnings upside potential and the scarcity premium as it’s the biggest potential hardware supplier leveraged to AI,” analysts concluded.

Nvidia stock is up about 2% in pre-market Tuesday.

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