Nvidia (NASDAQ: NVDA) Investors have had a turbulent year. artificial intelligence (AI) The chipmaker has soared 174% in 2024 as excitement over the rapid adoption of generative AI captivated Wall Street and Main Street. But those gains have been accompanied by extreme volatility as the value of this emerging opportunity remains uncertain.
In recent weeks, the stock has reversed course, plunging as much as 25%. Concerns about the state of the economy have called into question AI’s staying power and Nvidia’s ability to continue growing. The stock has recovered much of those losses, but questions remain.
One analyst believes Wall Street is aiming too low.
HSBC considers Nvidia a buy
HSBC analyst Frank Lee recently reiterated his buy rating on Nvidia and raised his price target to $145. That gives investors upside potential of 14% from Tuesday’s closing price. The analyst estimates Nvidia will report revenue of $30 billion in its fiscal second quarter, leading to revenue of $33 billion and $36 billion in subsequent quarters.
The analyst notes that spending on data center modernization is expected to continue through 2025, driven by strong demand for generative AI.
The analyst has clearly done his homework. The three largest cloud infrastructure providers, Amazon Web Services (AWS), Microsoft Azure, and AlphabetGoogle Cloud, which are Nvidia’s largest customers, have all been very clear about their plans increase their investment expenditure to meet the growing demand for AI. As the gold standard in AI processing, Nvidia is expected to be the beneficiary of much of this spending.
Additionally, the company’s key partners and rivals are reporting strong sales, suggesting Nvidia’s results will be equally strong.
If the analyst’s calculations are correct, Nvidia’s revenue will exceed $125 billion in fiscal 2025, more than double the $61 billion it earned last year — and marking its second consecutive year of triple-digit growth.
This is why Nvidia stock is a buy.
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