Bank of America hikes Nvidia price target, says shares can rally almost 40%

Nvidia could be positioned for even more growth ahead, according to Bank of America. Analyst Vivek Arya reiterated his buy rating on the chip giant and raised his price target by $25 to $190. That reflects around 38.8% upside from Thursday’s close. That would add to the monstrous rally it has already seen this year, with shares surging more than 176% in 2024. NVDA YTD mountain NVDA, 1-day The analyst thinks recent events in the industry — such as Taiwan Semiconductor’s third-quarter results and Nvidia CEO Jensen Huang saying earlier this month that demand for its Blackwell chip is “insane” – could increase the company’s competitive lead and generational opportunity. Not only that, Arya cited “underappreciated” enterprise partnerships with companies such as Accenture and ServiceNow as catalysts for more growth. “We also highlight a growing presence of AI in enterprise, where NVDA is the partner of choice (more on pg. 10),” the analyst wrote in a note to clients on Thursday. “NVDA’s engagements span multiple verticals (e.g., Accenture, ServiceNow, Microsoft), and offerings such as AI Foundry, AI Hubs, NIMs are key levers to its AI leadership, not only on the hardware side but also on systems/ecosystems side.” The analyst also thinks that Nvidia’s valuation is still “compelling.” The stock currently has a forward price-to-earnings ratio of around 48.1, according to FactSet. Looking ahead, Arya said the company could see at least $200 billion in free cash flow generation over the next two years, which would rival that of Apple and give it growth optionality. With this, he believes Nvidia’s FCF generation is also “underappreciated” by the market, noting that it’s at a margin that’s virtually around double that of the “Magnificent Seven” average. The stock advanced around 1% in the premarket on Friday following Arya’s price target change.