NVIDIA's (NVDA, Financial) stock has experienced substantial gains throughout the year, and analysts at Bank of America anticipate further increases. In a recent report, the target price for NVIDIA shares was raised from $165 to $190. This projection suggests a potential 38% increase from its recent close at $138.
According to the analysts, the artificial intelligence (AI) market is poised for exponential growth in the coming years. As NVIDIA reinforces its leadership position in the industry, it is expected to capture significant opportunities. The AI accelerator market, estimated at $45 billion in 2023, is predicted to surge to $280 billion by 2027 and eventually exceed $400 billion.
The report highlights the rapid advancement of AI models, with developers like OpenAI, Google, and Meta launching numerous large language models (LLMs) annually. These models demand increased computational intensity, particularly those designed for enhanced scale and reasoning capabilities.
NVIDIA's partnerships with corporate clients such as Accenture, ServiceNow, and Oracle underscore the growing importance of AI in large enterprises, solidifying NVIDIA's role as a preferred partner. The company's AI Foundry, AI Hubs, and other offerings are crucial to its leadership in AI technology, extending beyond hardware into systems and ecosystems.
Bank of America analysts also note that NVIDIA's strong financial position supports its future growth. With a free cash flow margin of 45%-50%, nearly double that of other tech giants, NVIDIA is projected to generate $200 billion in free cash flow over the next two years.
