Another Wall Street analyst with a “sell” on Nvidia is giving up

Another Wall Street analyst with a "sell" on Nvidia is giving up

(Bloomberg) — The latest research firm to earn the equivalent of a “sell” rating to Nvidia Corp.

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Morningstar Inc. The chipmaker updated to maintain the strong results it showed on Wednesday that showed growing demand for AI computing.

The research firm is “more bullish about rising AI workloads and how wide moat Nvidia should cement itself as a leader in AI chips,” analyst Brian Colello wrote in a note.

Nvidia now has 54 Buy ratings and five Hold ratings, according to data compiled by Bloomberg. The stock rose as much as 8.8% in pre-market trading Thursday, on track to hit a new all-time high. This year it has more than tripled, pushing the company’s market value to over $1 trillion.

Morningstar determines its ratings based on the current stock price, the analyst’s estimate of the stock’s “fair value” and the “uncertainty rating” for that rating. Nvidia’s fair value was raised to $480 per share from $300, while the uncertainty rating was raised to “very high.”

Nvidia’s data center business, including AI graphics processors, is expected to generate $41 billion in revenue in the fiscal year ending January 2024, compared to $15 billion a year earlier, according to Morningstar. The chipmaker reported $10 billion in data center revenue for the quarter ended July 31.

“We may be wrong, but we see little evidence that these GPU requests are a one-time upfront or build-out spend,” Colillo wrote, predicting the company’s sales would reach $60 billion next year and $100 billion in fiscal 2028. He added. “This may be unprecedented in the high-capital technology space, but we expect all kinds of companies to invest in AI.”

With the help of Subrat Patnaik.

(Updating the valuations tally and adding inventory movement in the fourth paragraph.)

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