Bank of America Says Nvidia can Lead the 'AI Arms Race'

Among the benefits of Nvidia's long-term potential in artificial intelligence is the excitement among Bank of America.

‍

The analyst Vivek Arya has reiterated his buy rating on Nvidia and has elevated his price target by $40 to $255. This implies that the company's stock could rise 17% from where it closed Monday to this new price target.

‍

ChatGPT is one of the best-known examples of generative AI, and the company can stand to benefit from it especially since generative AI focuses on creating new outputs based upon data already understood by the system, for example in the case of ChatGPT.

‍

“With its full stack of accelerated silicon/systems/software/developers, NVDA is uniquely positioned to lead the nascent generative AI arms race among global cloud and enterprise customers,” he wrote in a note to clients on Tuesday.

‍

The stock gained nearly 1% as a result of the note, and it's now up just over 49% so far this year, regaining a sizable amount of the 50.3% it lost in 2022.

‍

Upon increasing generative AI adoption, Arya predicted the company's sales and earnings could grow at compound annual rates between 25% and 34%. It is estimated that by the year 2027, generative AI will increase the total addressable market of its accelerator business to $62 billion.

‍

In light of the recent rally, the stock may see some volatility following the recent rally, but he thinks it will be short-lived.

‍

Although Arya admitted that generative AI is currently in the "requisite hype cycle," predicting the pace at which the technology will be adopted would require a lot of assumptions. Nevertheless, he believes the company should do well as a result of the move to accelerated computing.