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It’s no secret that computer gaming chipmaker turned artificial intelligence wunderkind Nvidia (NVDA) has had a fantastic year, but the party may have just begun for investors.
“The revenue monetization opportunity is so much greater [than investors appreciate],” Bank of America analyst Vivek Arya told Yahoo Finance executive editor Brian Sozzi on Yahoo Finance's Opening Bid podcast (video above; listen below).
“They really are a system integrator at this point,” Arya added. “They’re selling complete racks with all the computing, the networking, the optical resources, the memory, everything thrown in.”
The top semiconductor analyst just made a few waves in the market with his latest call on Nvidia.
He lifted his earnings per share estimates for 2024 and 2025, citing likely strong demand for its new Blackwell chip. Demand for Nvidia's prior AI chip — Hopper — remains hot, Arya said. Given this, Nvidia's stock is still cheap trading on a forward price-to-earnings multiple of 37 times, per Arya.
With the company poised to haul in a whopping $200 billion in free cash flow the next two years, Arya said the stock looks cheap on a price-to-cash flow basis too.
Arya sees at least 40% more upside in Nvidia's stock. Shares are already up 190% year to date and hovering near records amid an 18% surge in October.
Rival AMD's stock (AMD) is only up 5% on the year, as the performance specs on the company's AI chip released a few weeks ago disappointed investors.
Meanwhile, Intel (INTC) continues to slog through one of the worst periods in its existence, dominated by layoffs and inferior products. Shares have plunged 55% this year.
Key drivers for Arya's bullish Nvidia call (alongside less bullish views on Intel) include coming next-generation AI chips — Blackwell Ultra, Rubin, and Rubin Ultra. Those offerings will begin hitting the market in Q3 2025 based on Arya's analysis.
“Everyone is in a race,” Arya said about the country's AI infrastructure buildout. Arya envisions a scenario where OpenAI and companies like Meta (META) drive the market with open structures and cloud companies act as go-betweens. That only drives more need for Nvidia's best in class chips.
It's a demand backdrop that is real and lasting, C3.ai (AI) CEO Tom Siebel said on Opening Bid.
"As it relates to AI writ large, I mean, this is a secular change," Siebel said. "This is not ephemeral. It's a genuine big deal."