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Will Nvidia hit US$675 a share in 2021?

Nvidia received another price target upgrade this week, with one analyst saying the stock offers ‘best-in-class exposure’ to growth opportunities in AI, gaming and cloud computing.

  • Nvidia’s stocks closed above US$530 each on Monday (14 December 2020), after having finished under US$520 in the last three sessions
  • The stock was picked as one of investment bank Evercore’s top semiconductor stocks in 2021
  • Meanwhile, Nvidia could also post strong fourth quarter results for 2020, according to Bank of America

Shares of Nvidia Corporation rose 2.3% on Monday (14 December 2020), despite concerns over the possibility of additional Covid-related economic restrictions being implemented in the US.

The US’ largest chipmaker saw its shares close the day at US$532.35 apiece, after having closed under US$520 in the three previous sessions.

Nvidia among top semiconductor picks for 2021

On Monday, the stock was also named by investment banking advisory firm Evercore as one of its ‘top picks’ for the semiconductor industry.

Evercore analyst C.J. Muse maintained an ‘outperform’ rating on Nvidia, while raising his price target to US$675 from US$600 previously.

He said Nvidia provides ‘best-in-class exposure to secular growth opportunities’ in the prime areas of artificial intelligence, gaming and autonomous driving.

Muse further noted that the semiconductor industry’s uptrend is ‘just getting started’, despite outperforming in 2020. He forecasts that his semiconductor sector picks (including Nvidia) could potentially experience a 14% growth in revenue in 2021 to US$500 billion in total, at worst.

How is Nvidia expected to fare in Q4 2020?

Meanwhile, Bank of America’s (BoA) latest Steam graphics processing unit (GPU) data indicated that Nvidia could be headed for a big fourth quarter revenue showing.

BoA analyst Vivek Arya wrote in a new client note that the release of new gaming consoles from Microsoft and Sony have been generating a GPU upgrade cycle.

‘With only 10% of Nvidia gamers owning a GPU offering similar performance to the PS5/Xbox X (up 59bps MoM), we expect higher standards to increase Nvidia ASPs (Ampere US$699/US$499 price vs. Nvidia avg. user in the US$200-US$300 range),’ Arya said.

Last month, BoA analysts said the stock could potentially rally as much as 28% in the next 12 months, after Nvidia reported better-than-estimated third-quarter earnings.

They then raised their share price target on the stock to US$665 from US$650, while reiterating a ‘buy’ rating.

In that note, the analysts also underscored Nvidia’s 37% year-on-year organic sales growth, stating that this figure surpassed those of other semiconductor firms.

Nvidia, they added, is also expected to bring its 2020 outperformance into 2021, as demand for its products ‘remains strong across some of the most desirable end-markets in semis’, including gaming, artificial intelligence and cloud computing.

As such, the analysts predict that the company’s profits will increase by 2% through 2021. On a longer term basis, earnings per share is expected to nearly double from 2020 levels.

Overall, the stock currently has a 12-month consensus share price target of US$536.32 and rating of ‘buy’.

How to trade Nvidia shares with IG

Are you feeling bullish or bearish on Nvidia’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Nvidia Corp> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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