NVIDIA (NVDA) PT Raised to 'Street High' $900 as BofA Securities Sees Data Center Sales Tripling by 2025
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(Updated - June 18, 2021 7:03 AM EDT)
BofA Securities analyst Vivek Arya raised the price target on NVIDIA (NASDAQ: NVDA) to a "Street High" $900.00 (from $800.00) on the belief that Data Center Sales can Triple in the next 3 years for 3 reasons:
1) expanding adoption of AI accelerators (NVDA GPU) should increase to 11% of all servers from 5% today, well below the nearly 30% penetration in high performance computing, which is a leading indicator for cloud servers
2) NVDA should reach ~25% share in the emerging DPU category that could be a ~$1000+ of content and a $10bn total addressable market
3) CPU market share should reach 5% in the $30bn server market with the launch of Grace Arm-based CPU.
The analyst reiterated the buy rating, stating "new DPU + CPU categories affectively double NVDA’s content to ~$7-8K/server". "We raise our CY25E EPS-power to $33 (from $30 prior) driven by 24% sales CAGR and EBIT margins headed towards industry-leading 47-50% from 41% currently. Consensus often sees NVDA as a collection of cyclical gaming and high-growth AI products that faces a lot of competition. In our view the right approach is to view gaming, AI, cloud, 5G, edge, autos as all use-cases of a unique, highly leverageable parallel computing architecture resting on a foundation of ever-expanding software/developer ecosystem."
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