<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Nvidia (NVDA) stock has been on the rampage since the turn of the year, barely pausing to take a break. The macro environment and stay-at-home measures have played to Nvidia’s strengths, and with year-to-date gains of a 35%, expectations are high heading into next Thursday’s earnings.” data-reactid=”12″>Nvidia (NVDA) stock has been on the rampage since the turn of the year, barely pausing to take a break. The macro environment and stay-at-home measures have played to Nvidia’s strengths, and with year-to-date gains of a 35%, expectations are high heading into next Thursday’s earnings.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="According to 5-star Merrill lynch analyst Vivek Arya, the company’s recent acquisitions will “add new growth legs,” to its already wide-reaching limbs.” data-reactid=”21″>According to 5-star Merrill lynch analyst Vivek Arya, the company’s recent acquisitions will “add new growth legs,” to its already wide-reaching limbs.
Last week, following Chinese regulatory approval, Nvidia finally closed the long awaited Mellanox acquisition – paying $6.9 billion for the Israeli data center specialist.
“Mellanox’s networking capabilities (Spectrum5 switch), and its dominant 59% share in supercomputing connectivity (Infinband) also well complement NVDA’s recent forays into 5G edge compute, and supercomputing/HPC acceleration,” Arya noted.
Last week was a busy one at Nvidia HQ, as the company announced it planned to add another name to the family. The company intends to acquire Cumulus – a provider of open source network tools. Arya believes that, together, the new additions could provide 10% accretion in the near term (FY22/CY21E). But, looking further ahead, the new purchases could potentially increase data center sales from the current 30-35% up to 45-50% of Nvidia’s total revenue, eventually pushing CY22/23 pf-EPS to the $15 region.
Moreover, the additions should further increase Nvidia’s data center market share, moving it closer to becoming a “compute & networking powerhouse.”
Arya said, “While the company has been a pioneer and leader in acceleration processing layer, Mellanox (networking, data pre-processing via smart network interface-cards or NICs) and Cumulus (Linux-based open source networking tools) add critical/timely complementary capabilities, potentially challenging leaders Broadcom, Intel and traditional hardware and networking OEMs.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Accordingly, Arya reiterated a Buy rating on NVDA shares, along with a price objective of $360. Investors could be pocketing gains in the shape of 16%, should the target be met over the next 12 months. (To watch Arya’s track record, click here)” data-reactid=”27″>Accordingly, Arya reiterated a Buy rating on NVDA shares, along with a price objective of $360. Investors could be pocketing gains in the shape of 16%, should the target be met over the next 12 months. (To watch Arya’s track record, click here)
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Looking at the consensus breakdown, Nvidia’s Strong Buy consensus rating is based on 26 Buys, 4 Holds and 1 Sell. Interestingly, though, the average price target of $317.57, represents a modest upside of 2%. Nvidia’s share gains appears to have caught the Street off guard, so expect some analysts to revise their Nvidia models in the near term. (See Nvidia stock analysis on TipRanks)” data-reactid=”28″>Looking at the consensus breakdown, Nvidia’s Strong Buy consensus rating is based on 26 Buys, 4 Holds and 1 Sell. Interestingly, though, the average price target of $317.57, represents a modest upside of 2%. Nvidia’s share gains appears to have caught the Street off guard, so expect some analysts to revise their Nvidia models in the near term. (See Nvidia stock analysis on TipRanks)
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.” data-reactid=”37″>To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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