An analyst at Canaccord Genuity has raised the target price for Nvidia stock from $155 to $180, based on the company’s success in the data center.
The change in target price was made after Matthew Ramsay, a leading Wall Street analyst for Canaccord specializing in technology, reviewed the market and concluded that Nvidia will be able to weather the competition from in-house custom chips such as the Google TPU.
Ramsay noted that he was surprised by the assumption that in-house ASICs (application-specific integrated circuits) will quickly proliferate and take over the data center. The idea that a TPU ASIC, as a subset of the deep learning, AI training, and big data markets will quickly take over and render Nvidia’s current stock valuation too high seems subjective.
In fact, Ramsay said that Nvidia’s record of thought leadership and adaptation to changing markets will protect the company’s market share within the data center. “While we agree (that) ASPs will come down as accelerator penetration increases,” he said, “we were very impressed (with) how quickly Nvidia has adapted its Volta chipset roadmaps to be more application-specific for the data center.” In a sense, Nvidia is meeting the competition of custom chips by making its existing chips more specific to different applications.
This, he feels, will protect the company’s market share and as such, Nvidia should still be able to meet targets including tripling data center chip business by 2020, despite growing competition from custom chip manufacturers.
These recommendations are supported by other analysts, as well. Mark Lipacis, an analyst at Jeffries’ & Co., has also rated Nvidia as a ‘buy’. Lipacis has predicted that there will be a fourth wave of computing, as focus shifts to parallel processing/IoT model. In his estimation, the fourth wave will be driven by “lower memory costs, free data storage, improvements in parallel processing hardware and software, and improvements in AI technologies.”
This fourth wave is predicted to benefit Nvidia, a company that excels at parallel processing, and to work to the detriment of Intel, the leader in the market in the previous period.
Nvidia has also been rated as a ‘buy’ with a target price of $200.00 from Needham, and $185 from Merrill Lynch.