AI chip leader Nvidia will make a fortune in the approaching years and its shareholders might be rewarded for it, a technology analyst predicted.
Ben Reitzes, Managing Director and Head of Technology Research at Melius Research, said CNBC on Wednesday that Jensen Huang’s Nvidia has mastered a “full-stack” approach with its hardware and software, thereby gaining a decisive advantage in the sphere of artificial intelligence.
“They have developed a computer language and an ecosystem that can monetize AI, and they are obviously hitting the jackpot,” he said.
Reitzes has a $160 price goal on Nvidia stock, representing a 30% gain from Friday’s closing price. Despite a sustained sell-off that began earlier this month, shares are up 150% to date this yr after greater than tripling in 2023. Among the Magnificent 7 stocks he covers, Nvidia has essentially the most upside potential, he added.
Another big advantage Nvidia has over its competitors is the annual frequency with which the corporate releases recent products, Reitzes said. This means developers and customers know where Nvidia is headed and might budget for upgrades accordingly.
“And they’re going 150 miles an hour while everyone else is going 100 miles an hour. It’s going to be hard to catch these guys,” he said.
Given Nvidia’s lead within the booming AI sector, Melius Research forecasts the corporate will generate $270 billion in money over the subsequent three years, potentially laying the inspiration for huge returns for shareholders.
Management will not be keen to tout the opportunity of share buybacks, as they are sometimes related to older firms, Reitzes said. But from his perspective, it is clear.
“Nobody talks about it, and if you apply our model, it’s a windfall,” he said. “And there’s nothing they can do about it. This government won’t allow them to buy big things. They can’t invest that much in research and development. It’s just not possible. So we as shareholders have to get the money.”
Nvidia has paid back capital to its shareholders. In August, the corporate announced a Buyback program value $25 billionAnd last month, Nvidia increased its quarterly money dividend by 150% from $0.04 per share to $0.10, which equates to $0.01 per share after the split.
Nvidia declined to comment on the opportunity of further share buybacks.
Reitzes, for his part, stressed that future share buybacks wouldn’t mean that Nvidia had stopped growing. “It’s not an insult to buy back shares when you have nothing else to do.”
Nvidia’s latest financial results show that the corporate’s ability to generate money is increasing. Fiscal yr In January, Nvidia’s net money flow from operating activities increased to $28.1 billion in comparison with $5.6 billion within the previous yr.
And within the First quarter The fiscal yr ending in April resulted in net money flow from operating activities of $15.3 billion – greater than half of the previous yr’s amount.
Meanwhile, Huang told investors last week that Nvidia will proceed to be the gold standard for AI training chips, despite concerns that competitors could erode its market share.
The introduction of Nvidia’s Blackwell system later this yr will only solidify that lead, he said Wednesday at the corporate’s annual shareholder meeting.
“The Blackwell architecture platform will probably be the most successful product in our history and even in the entire history of computing,” Huang said.
