3 reasons why Piper Sandler just named Nvidia its new Top Large-Cap Pick

December 4, 2023 6:49 AM EST
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Piper Sandler analyst Harsh Kumar reiterated an Overweight rating and a $620 per share price target on Nvidia (NASDAQ: NVDA) stock.

Moreover, the analyst has designated NVDA as its new Top Large-Cap Pick, replacing Advanced Micro Devices (NASDAQ: AMD).

The decision is grounded in several factors. Firstly, the valuation of NVDA is now considerably more appealing compared to AMD, Kumar writes in a client note.

Secondly, NVDA offers a comprehensive compute stack, providing significant efficiencies and competitive advantages at the system level.

Thirdly, the expectation is that software licenses will become a substantial part of overall revenue, expanding NVDA's TAM.

“While we feel that FY25 is not fully booked, we believe NVDA has good visibility into FY25 through strong backlog coupled with demand tailwinds,” Kumar said.

“We also see a new China chip contributing to revenues by the April quarter in the range of $2.5B-$3B /quarter once fully ramped.”

On the other hand, while AMD remains “a premier player in the compute space with numerous tailwinds going its way,” Kumar says Nvidia “offers a much more compelling multiple at these levels.”

Nvidia stock is down 1% in pre-market trade on Monday while AMD shares fell 0.7%.

By Senad Karaahmetovic

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