On Tuesday, CFRA maintained a Buy rating on NVIDIA (NASDAQ:NVDA) and increased the stock price target significantly from $840.00 to $1,000.00. The new target reflects a bullish outlook based on anticipated advancements and market demand for the company's next-generation graphics processing units (GPUs).
The firm's decision to raise the price target is based on a higher revised price-to-earnings (P/E) ratio of 32 times their calendar year 2025 earnings per share (EPS) estimate. This valuation is above the average of NVIDIA's peers but remains below the company's historical average.
CFRA also adjusted its EPS forecasts, raising the fiscal year 2025 (ending January) estimate to $25.00 from $23.40 and the fiscal year 2026 estimate to $31.25 from $28.00.
CFRA's positive stance is fueled by the expectation that NVIDIA will outperform consensus forecasts as it introduces its next-generation GPUs, which are already showing signs of supply constraints extending well into the calendar year 2025. The new GPUs, including the yet-to-be-detailed Blackwell, are expected to be introduced at more favorable price points.
Recent statements from technology companies such as Dell (NYSE:DELL) and HP (NYSE:HPQ) Enterprise indicate a growing momentum for artificial intelligence (AI) workloads in the enterprise sector. This expansion, along with increased penetration in edge computing, supports CFRA's optimistic view of NVIDIA's potential to grow its total addressable market over the coming decade.
Additionally, the potential resurgence of demand from China, with recent approvals to sell specific NVIDIA products, and the upcoming launch of the H200 in the April quarter are projected to contribute to revenue and EPS growth. CFRA also highlighted NVIDIA's strong free cash flow (FCF), which is expected to surpass $50 billion in the next 12 months, bolstered by elevated profit margins.
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