Opinions
Kim Bolton
NVIDIA Corporation
NVDA-Q
PARTIAL BUY
May 21, 2025
Stock price when the opinion was issued
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Premium contentNVDA has had some setbacks with AI competition and trade war uncertainty, but recently reported earnings showed a 69% increase in revenues --including a 73% increase in data center revenues. It trades at 46x earnings and supports a ROE over 100%. We like that cash reserves are growing, while shares are aggressively bought back and debt is retired. We recommend setting a stop-loss at $106, looking to achieve $172 -- upside potential of 18%. Yield 0.03%
(Analysts’ price target is $172.22)Used to make 75% gross margins, but those have jumped to 90%. If it goes back to historic gross margins, even if sales continue, you'll see a huge degradation in profit. Sweet spot in terms of demand. Market thinks it can do no wrong. Worries that demand will abate or just normalize. Good news is baked in. Watch your position size.
Premium contentPremium contentProbably a good place to write some calls against it, especially as average analyst price target is ~$175. Over next few days, analysts will probably up price targets due to H20 chips being allowed to China. It'll be king of the hill for at least 18 more months. Should definitely be in your top 5.
(Analysts’ price target is $175.00)
Has to be in your top 5 holdings, even at $137. If you can ever get it just under $100, it'll be golden for you, you'll just have to back up the truck. 12-month price target of $161.40, and that's only going to move up. NVDA is to GPUs as AAPL is to smartphones. Making a lot of "other bets" that will pay off for them as it did for GOOG.
If you don't own it, buy 1/4-1/3 of a position here, another bit in the $120s, and then around $110.