Will Nvidia hit US$675 a share in 2021?

• Nvidia’s stocks closed above US$530 each on Monday (14 December 2020), after having finished under US$520 in the last three sessions
• The stock was picked as one of investment bank Evercore’s top semiconductor stocks in 2021
• Meanwhile, Nvidia could also post strong fourth quarter results for 2020, according to Bank of America

Shares of Nvidia Corporation rose 2.3% on Monday (14 December 2020), despite concerns over the possibility of additional Covid-related economic restrictions being implemented in the US.

The US’ largest chipmaker saw its shares close the day at US$532.35 apiece, after having closed under US$520 in the three previous sessions.

Nvidia among top semiconductor picks for 2021

On Monday, the stock was also named by investment banking advisory firm Evercore as one of its ‘top picks’ for the semiconductor industry.

Evercore analyst C.J. Muse maintained an ‘outperform’ rating on Nvidia, while raising his price target to US$675 from US$600 previously.

He said Nvidia provides ‘best-in-class exposure to secular growth opportunities’ in the prime areas of artificial intelligence, gaming and autonomous driving.

Muse further noted that the semiconductor industry’s uptrend is ‘just getting started’, despite outperforming in 2020. He forecasts that his semiconductor sector picks (including Nvidia) could potentially experience a 14% growth in revenue in 2021 to US$500 billion in total, at worst.

How is Nvidia expected to fare in Q4 2020?

Meanwhile, Bank of America’s (BoA) latest Steam graphics processing unit (GPU) data indicated that Nvidia could be headed for a big fourth quarter revenue showing.

BoA analyst Vivek Arya wrote in a new client note that the release of new gaming consoles from Microsoft and Sony have been generating a GPU upgrade cycle.

‘With only 10% of Nvidia gamers owning a GPU offering similar performance to the PS5/Xbox X (up 59bps MoM), we expect higher standards to increase Nvidia ASPs (Ampere US$699/US$499 price vs. Nvidia avg. user in the US$200-US$300 range),’ Arya said.

Last month, BoA analysts said the stock could potentially rally as much as 28% in the next 12 months, after Nvidia reported better-than-estimated third-quarter earnings.

They then raised their share price target on the stock to US$665 from US$650, while reiterating a ‘buy’ rating.

In that note, the analysts also underscored Nvidia’s 37% year-on-year organic sales growth, stating that this figure surpassed those of other semiconductor firms.

Nvidia, they added, is also expected to bring its 2020 outperformance into 2021, as demand for its products ‘remains strong across some of the most desirable end-markets in semis’, including gaming, artificial intelligence and cloud computing.

As such, the analysts predict that the company’s profits will increase by 2% through 2021. On a longer term basis, earnings per share is expected to nearly double from 2020 levels.

Overall, the stock currently has a 12-month consensus share price target of US$536.32 and rating of ‘buy’.

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