Bank of America met with the company’s chief financial officer (CFO), Colette Kress, and other top executives. During the meeting, Bank of America noticed some positive trends for the chip giant, and Nvidia stock (NASDAQ:NVDA) dropped by about 3% in early trading on Thursday.
The following are the key conclusions from the meeting, according to analyst Vivek Arya:
- After the current quarter, which ends in January, the gaming channel is predicted to “essentially normalize.”
- Despite worries coming out of China and macroeconomic difficulties, there is “strong demand” for the new RTX 40xx series Ada Lovelace gaming goods.
- The company is “mindful” of the headwinds in cloud spending, but Nvidia (NASDAQ:NVDA) has solutions like its new H100 Hopper AI accelerators, Grace Hopper CPU/GPU systems, and bundling the high-speed networking products from Mellanox to areas of high-performance computing to overcome these headwinds.
In a note to clients, Arya said, “We still think the stock is a Buy, and we expect it to get going again once we get past the Q1 consumer and cloud spending headwinds.” The price target set by Arya for shares of Nvidia is $215.
NVIDIA Stock Outlook
Arya went on to say that there is significant demand for the RTX 4090, RTX 4080, and the recently released 4070 Ti, and that the crypto mining overhang is basically “gone.” Although no specifics were provided at the meeting, “normalized” demand for gaming is approximately $2.5 billion via sell-through per quarter, as opposed to the present sell-in rate of approximately $1.5 to $1.6 billion per quarter.
The recent acceptance of new games from outside the country and the intensity of the seasonal demand, Arya continued, might more than makeup for whatever “turmoil” that China’s reopening would cause.
In December, UBS said it was optimistic about chips through 2023. It chose Nvidia (NVDA) as one of its top picks because it thought the momentum would grow in the second half of the year.
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