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Unstoppable Nvidia: Harnessing the Power of Generative AI for Exponential Growth

Nvidia has experienced an extraordinary performance this year, as its stock has soared by a staggering 89% year-to-date. This chip behemoth’s triumph can be primarily credited to 2023’s hottest trend: Generative AI. Widely acknowledged as a trailblazer in the industry, Nvidia is poised to reap the rewards of increased adoption of this cutting-edge technology.

Anticipating a Strong F1Q Nvidia  Earnings Report

As we approach next month’s F1Q earnings release on May 24, Morgan Stanley analyst Joseph Moore anticipates that the buzz surrounding AI will contribute to a robust financial report. “We foresee a favorable outcome for Nvidia in this quarter’s earnings, as our findings suggest that the considerable enthusiasm from AI adopters has led to a resurgence in demand for data center (DC) products,” said the five-star analyst.

Moore also predicts that the flagship AI chip H100, along with the return of its predecessor, the A100, will propel the quarter’s growth. Furthermore, over the next five years, Nvidia’s state-of-the-art AI/ML hardware solutions, invigorated by the enthusiasm around generative AI, are expected to drive significant expansion in the DC business.

However, it’s not just the DC segment that’s thriving. Moore also highlights Nvidia’s original cash cow – Gaming. Following several quarters of waning growth, this sector exhibited a resurgence in FQ4 (January quarter). With expected tailwinds from the 40-series product throughout the year, Moore envisions a golden “opportunity for the company to reaccelerate growth in the gaming business.”

So, what does this all mean for investors? Moore currently assigns an Overweight rating (i.e., Buy) to Nvidia’s shares, with a $304 price target indicating a 10% premium within a year. 

Based on 30 Buys, 7 Holds, and just a single Sell, Nvidia currently holds a Strong Buy consensus rating, shifting our focus to the broader market. Although the average price target of $286.94 implies a modest 4% upside in the coming months, the company’s leadership in generative AI and its potential for growth remain undeniable