To the delight of some investors, and the frustration of others, Nvidia’s (NASDAQ: NVDA) share price has continued to charge higher this year. Currently, it’s up about 35%, and that’s after a small pullback in recent days.
Analysts at HSBC believe the stock can go much higher in the medium term though. They just slapped a new price target on the stock and it’s miles above the current share price.
A bullish view
In a research note posted last week, HSBC tech analyst Frank Lee said that he expects the market for Nvidia’s artificial intelligence (AI) graphics processing units (GPUs) to keep growing beyond its Big Tech ‘hyperscaler’ customers (Amazon, Alphabet, etc). His view is that there’s likely to be plenty of demand from ‘emerging’ AI players like OpenAI and CoreWeave as well as sovereign AI infrastructure projects (eg Saudi Arabia).
“We expect AI GPU TAM [total addressable market] to keep increasing beyond hyperscalers, leading to continuous earnings growth.”
HSBC analyst Frank Lee
Note that Lee believes data centre demand in FY27 (the year starting February 2026) will be well above current forecasts. His base-case estimate here is $351bn – way higher than the current FactSet consensus forecast of $253bn.
Lofty share price target
As a result of these views, Lee has upgraded the Nasdaq-listed chip stock from Hold to Buy. He’s also raised his price target from $200 to $320.
That new price target is the highest on Wall Street, as far as I’m aware. Given that Nvidia’s trading near $180 today, it implies that there’s potential for gains of nearly 80% in the medium term.
Can it get there?
Now personally, $320 is a bit of a stretch for me in the medium term. My own 12-month price target for Nvidia is around $250. That’s based on earnings growth of around 50% this financial year and 40% next (and the price-to-earnings ratio staying at similar levels to today’s).
But look, if FY27 data centre revenues are way higher than expected, as HSBC predicts, a share price of $320 could be a possibility. In this scenario, we could see the valuation re-rate upwards, pushing the stock – and the market-cap – to stratospheric levels.
A good investment today?
So is Nvidia a good investment today? Well, my view is that it’s worth considering on pullbacks. It does have a lot of potential given the scale of the global AI infrastructure buildout. However, it remains a risky stock.
If there’s any hint of a slowdown in AI spending, the stock could fall 20% in the blink of an eye. So investors don’t want to rush in blindly at the top.
In my view, the way to play it is to take a closer look every time it drops 10% or more. Personally, I’ll be looking to buy more shares if it falls back to the $150-$160 zone.
This story originally appeared on Motley Fool
