Wall Street’s Last Analyst With a ‘Sell’ on Nvidia Gives In

(Bloomberg) — The last research firm with the equivalent of a “sell” rating on Nvidia Corp. is throwing in the towel.

Most Read from Bloomberg

Morningstar Inc. upgraded the chipmaker to hold after blowout results on Wednesday that showed booming demand for artificial intelligence computing.

The research firm is “much more optimistic about the rise of AI workloads and how Nvidia’s wide moat should cement itself as an AI chip leader,” analyst Brian Colello wrote in a note.

Nvidia now has 54 buy ratings and five holds, according to data compiled by Bloomberg. The stock rallied as much as 8.8% in premarket trading on Thursday, on track for a new all-time high. It has more than tripled this year, pushing the company’s market valuation above $1 trillion.

Morningstar determines its ratings based on the current share price, the analyst’s estimate of the stock’s “fair value” and an “uncertainty rating” of that valuation. Nvidia’s fair value was lifted to $480 per share from $300, while its uncertainty rating was raised to “very high.”

Nvidia’s data center business, including AI graphics processors, is expected to generate $41 billion in revenue in the fiscal year ending January 2024, compared with $15 billion a year earlier, according to Morningstar. The chipmaker reported data center revenue of $10 billion in the quarter ended July 31.

“We could be wrong, but we see little evidence that these GPU orders are upfront spending or a one-time build,” Colello wrote, estimating sales for the business could reach $60 billion next year and $100 billion in fiscal 2028. “Such growth might be unprecedented in large-cap tech, but we foresee all types of enterprises investing in AI,” he added.

–With assistance from Subrat Patnaik.

(Updates ratings tally and adds stock move in fourth paragraph.)

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.

Leave a Comment