On Wednesday, BofA Securities maintained a positive stance on NVIDIA Corporation (NASDAQ:NVDA), reiterating a Buy rating and a stock price target of $1,100.00. The endorsement follows a financial analyst Q&A session at the GPU Technology Conference (GTC) 2024, where NVIDIA's growing Total Addressable Market (TAM) and margin outlooks were discussed, along with the company's strengthening position in artificial intelligence (AI).
According to the analysis, NVIDIA's accelerated computing TAM, valued at $250 billion annually, is just the beginning, representing only the transition from traditional to accelerated data centers. This does not take into account the additional demand generated by generative AI (genAI), which is seen as entirely incremental.
Furthermore, the GPU-specific TAM is far from reaching saturation or entering a replacement cycle. Data center operators are expected to improve efficiency not by replacing older GPUs but rather by substituting traditional compute units (CPUs) with GPUs.
The new Blackwell GPU is anticipated to have an average selling price (ASP) between $30,000 and $40,000, compared to the $20,000 to $30,000 range of its predecessor, Hopper. This represents a moderate generation-over-generation increase of about 40%.
Still, the gross margins (GMs) for Blackwell are projected to remain stable in the mid-70% range. This is attributed to the sale of a more diverse mix of high-specification chips, NVLink, switches, and system offerings.
Lastly, the analyst highlighted that NVIDIA's NVLink-enabled systems are expected to enhance the company's dominance in AI, extending from training to inference applications. This points to NVIDIA's continued leadership and innovation in the AI and computing sectors.
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