Nvidia's stock is soaring on the A.I. buzz. Here’s where Wall Street sees it going next

Published Thu, Feb 23 20237:16 PM ESTUpdated Thu, Feb 23 202310:40 PM EST

After a bad 2022 — along with most chip companies — U.S. giant Nvidia has seen a major turnaround, clawing back the losses it incurred. Nvidia shares are currently up around 62% year-to-date, following a decline of about 50% in 2022. The company on Wednesday reported slightly higher revenue and net income than Wall Street expected, despite a year-over-year decrease in both categories. This pushed its stock around 8% higher in extended trading. Nvidia's data center business, which develops chips for AI, continued to grow, with its CEO saying that the technology is at an "inflection point." There has been much buzz recently around artificial intelligence — and what it could mean for companies like Nvidia. The firm dominates roughly 80% of the market for graphics processing units, or GPUs, used to speed up AI processes. Here's what Wall Street analysts say about Nvidia, and where they see it going next. 'Multi-billion dollar opportunity' Most analysts are optimistic about the firm's ability to cash in on the AI trend. Morgan Stanley in a note Tuesday raised its price target for Nvidia from $175 to $246 in its base case. In its bull case for the stock, its price target is $348, although the bank gives it an equal-weight rating. "The most important development is the enthusiasm that Chat GPT has created both from the generalist investor base, and within the executive suites, focused on what likely becomes an arms race for who has the best model," the bank's analysts wrote. "That's not a new theme for NVIDIA … but the focus that it is bringing to hyperscale capex is intensifying considerably," they said, adding that they expect Nvidia's non-gaming business to drive much of its growth in the near term. Nvidia's shares closed at $236.64 on Thursday. UBS in a Monday note also raised its price target for Nvidia from $200 to $270. The bank said it was "very optimistic about the longer-term generative AI opportunity," but sees risk to Nvidia's data center business. "Regardless of near-term, we expect a very bullish tone from [management] around the impact that generative AI and models like ChatGPT and Bard AI from Google will have on NVDA's [total available market] and the broader computing landscape and this should keep interest in the stock very high even if near-term guidance is a touch soft," UBS analysts said. BMO Capital Markets in a Feb. 21 note also pointed to the "increasing weaker environment" for the company's data center business in the near term. However, it was much more optimistic further out. "Beyond the near term, we see a potentially meaningful multi-billion dollar opportunity emerging for the company in generative AI," wrote BMO analysts, who added they expect a "strong rebound" for the data center business heading into 2024. They also raised the price target for Nvidia from $210 to $240. Still, not everyone is so bullish. Wedbush analyst Matt Bryson has a neutral rating on the stock and gives it a price target of $175, or 26% downside. While he acknowledged that Nvidia will benefit from the AI proliferation given its dominant position in the data center market, he said it's less certain that the firm can "sidestep" the downtick in general IT budgets. Cloud, as well as enterprise spending, is declining into 2023, he said. Overall, average analyst estimates on FactSet put the stock's average upside at 9%, with 64% of analysts giving it a buy rating. — CNBC's Michael Bloom contributed to this report.