As demand for artificial intelligence increases, Bank of America predicted on Wednesday that Nvidia stock price may reach levels not seen in over a year.
The note from BofA analysts arrives after Nvidia stock has already skyrocketed due to the ChatGPT craze this year. Wednesday’s trading volume was approximately $277 per share.
Historical Stock Performance of Nvidia
BofA Securities analyst Vivek Arya believes that as AI workloads grow in the cloud and enterprise data centers, more resources will be devoted to specialized accelerators like NVDA GPUs and custom chips from Broadcom/Marvell.
According to the bank, sales of specialized accelerators could surpass those of x86 processors
in 2023. Accelerators enhance artificial intelligence and machine learning applications.
In light of these factors, BofA increased its price target for Nvidia from $310 to $340 per share. The rating on the stock is bought.
The previous price target was $276.67, so the increase to $340 is 23%. The last time the shares traded over $340 was on November 22, 2021, when they reached $346.47.
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AI adoption will accelerate cloud servers to 50%
The popularity of OpenAI’s ChatGPT language tool has fueled a trend toward artificial intelligence (AI), which investors believe will benefit Nvidia’s stock price this year. The equipment manufactured by Nvidia that powers artificial intelligence applications in automobiles and robots has garnered the company’s widespread attention.
Accelerator processors, such as the NVDA GPU, the Broadcom-enabled Google TPU, or the Amazon Inferentia, are well-suited to the task of handling the massive datasets and training parameters required for generative AI workloads, as explained by Arya.
BofA anticipates a crossover this year that will result in sales of accelerators exceeding $40 billion by 2025. Starting in 2022, this would imply a CAGR of at least 37%, while sales of x86 CPUs grow at a more modest 3%, to $26 billion.
Nvidia and custom chip enablers Broadcom and Marvell would benefit from this expansion, according to Arya, while AMD and Intel would suffer. He claims that AMD, Arm Holdings, and accelerator makers can easily take 75% of the server CPU market away from Intel.
As more applications are written to take advantage of accelerators, the percentage of accelerated cloud servers is expected to rise to 50% as a result of AI adoption.
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