Nvidia (NASDAQ: NVDA) investors have been on a wild ride this year. The artificial intelligence (AI) chipmaker soared as much as 174% in 2024, as excitement about the rapid adoption of generative AI has captivated Wall Street and Main Street alike. With those gains, however, has come extreme volatility, as the value of this emerging opportunity remains uncertain.
In recent weeks, the stock reversed course, plunging as much as 25%. Fears about the state of the economy have called into question the staying power of AI and how much further Nvidia can grow from here. The stock has regained much of those losses, but the questions remain.
One analyst believes Wall Street is setting its sights too low.
HSBC says Nvidia is a buy
HSBC analyst Frank Lee recently reiterated his buy rating on Nvidia stock and increased his price target to $145. That represents potential upside for investors of 14% compared to Tuesday's closing price. The analyst believes that Nvidia will report $30 billion in sales for its fiscal second quarter, generating revenue of $33 billion and $36 billion in the quarters that follow.
The analyst notes that spending to upgrade data centers is on track to continue into 2025, driven by strong demand for generative AI.
The analyst has obviously done his homework. The three biggest cloud infrastructure providers, Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud, which are Nvidia's biggest customers, have all been crystal clear about plans to increase their capital expenditure spending to meet the accelerating demand for AI. As the gold standard for AI processing, Nvidia is likely to be the beneficiary of much of that spending.
Furthermore, the company's biggest partners and rivals are reporting strong sales, which suggests Nvidia's results will be equally robust.
If the analyst's calculations are correct, Nvidia's revenue will top $125 billion in fiscal 2025, more than double the $61 billion it earned last year -- and marking its second consecutive year of triple-digit growth.
That's why Nvidia stock is a buy.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $779,735!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 12, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Is Nvidia Stock Going to $145? 1 Wall Street Analyst Thinks So. was originally published by The Motley Fool