Introduction
In recent months, Nvidia has experienced a slight loss in its momentum. However, analysts at Citi believe that the company's next generation of graphics-processing units (GPUs) could be the driving force for another upward trajectory, and it may arrive sooner than expected.
Current Situation
Although Nvidia's stock (ticker: NVDA) has surged nearly threefold in value this year, its shares have remained relatively stagnant in recent months. This is because investors have already factored in the gains from Nvidia's H100 GPU, which is anticipated to become highly sought after for artificial intelligence applications.
The Potential Catalyst
According to Citi analyst Atif Malik, Nvidia could unlock further gains if it releases its next-generation B100 GPU, also known as Blackwell, in the first half of next year. While Nvidia's normal AI chip production schedule suggests a release in the second half of 2024, the company might expedite its timeline to meet the skyrocketing demand and stay ahead of competitors.
Advancements and Implications
Malik argues that the B100 GPU could be an even more significant tech breakthrough than the H100 at its launch. This, in turn, could result in rapid adoption and drive up Nvidia's average selling prices, sales, and margins. Notably, if Nvidia employs Taiwan Semiconductor Manufacturing's (TSM) cutting-edge 3-nanometer manufacturing process and incorporates 'chiplet' stacking technology, which combines multiple small chips, the B100 could represent a significant technological leap forward.
Analyst's Perspective and Target Price
Keeping these possibilities in mind, Malik maintains a Buy rating and a $630 target price for Nvidia shares. These figures are based on a price-to-earnings multiple of 35 times the company's projected earnings for the year 2025.
As of Monday's premarket trading, Nvidia shares were up 1.3% at $440.43.
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