-
According to Andrew Chang of S&P Global, Nvidia’s stock rally still has 12 to 18 months to go.
-
The stock has at least another year of “strong runaway” amid strong demand for its chips, Chang said.
-
He expressed concern about a drop in AI investments in the coming quarters, which could impact the stock.
Nvidia stock has a lot more room to rise – and shares of the market most popular chip maker will rise for at least another year, according to Andrew Chang, technology director at S&P Global Ratings.
The banking veteran pointed out recently comments by Jensen Huangwho sparked a sharp rally in NVDA shares this week after speaking at a Goldman Sachs conference in San Francisco. Nvidia’s CEO provided more guidance on consumer demand and specifically demand for Blackwell, the company’s next-generation GPU.
His comments reinforce predictions of continued upside for Nvidia, Chang said in an interview with Schwab Network on Friday.
“It just reaffirms our view that we have a strong runway for the next 12 months,” Chang said.
Nvidia’s partners are also showing signs of strong chip demand. Oracle, which has an ongoing partnership with Nvidia, raised its revenue expectations after beating first-quarter earnings. The software company also doubled its planned capital expenditures for the fiscal year – all positive signs for Nvidia.
“These are all great data points that look great, at least for the next 12 to 18 months,” Chang said of the Jensen Huang-led company.
Still, he acknowledged there are some concerns that investors have expressed. Some have raised concerns that Nvidia’s growth is unsustainable, given the stock’s monster gain of 2,514% over the past five years.
Some analysts have warned that demand for Nvidia chips may not remain strong for years to come the company’s biggest customers could eventually become competitors. Apple And Microsofttwo major customers of Nvidia’s GPUs are reportedly working on their own AI chips.
“Ultimately, if Oracle, if Microsoft, if Amazon don’t see the ROI that they expect, they’re going to cut orders. So hyperscale, demand volatility is something that really concerns us,” Chang said. “But you know, these data center players have been known to order a bunch and then pause for a few quarters. That’s what we’re looking forward to.”
Investors will also have to watch for stricter regulation of AI. Nvidia was recently targeted by the Justice Department in a new antitrust investigation, Bloomberg reported, and it’s only a “matter of time” before other countries follow suit and try to regulate the technology, Chang said.
Nvidia shares sold off in the weeks after its late August earnings report. but the stock had another rally this week in addition to other technological leaders, including Oracle and Super Micro Computer.
Wall Street remains generally bullish on Nvidia. According to Nasdaq data, analysts have issued an average price target of $153 per share, implying an upside of 29% from current levels.
Read the original article Business insider