Nvidia Stock Loses Sell Rating As HSBC Flags AI Potential

There are no Wall Street analysts advising investors to sell Nvidia Corp. shares.

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The chipmaker surged as high as 4.1% when HSBC Corp.'s Frank Lee, the lone analyst with a sell-equivalent recommendation on the company, upgraded it to buy. In a research note issued Tuesday, Lee stated that the company's artificial intelligence promise outweighs his earlier concerns about a slowdown in data centers and growing inventory levels.

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Nvidia, which is expected to benefit the most from Wall Street's AI mania, has seen its shares rise more than 140% from their October low, becoming the largest gainer on the S&P 500 Index and Nasdaq 100 Index.

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Lee, who has had a downgrade on the stock since taking on coverage at the end of last year, has turned positive on the firm, handing it a rare two-level upgrade. He also increased the stock's price objective to a Wall Street high of $355 from $175.

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"We're stunned by Nvidia's pricing strength on AI chips, which we view driving earnings upside and greater valuation," said Lee in the report.

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Everyone wants to get in on the AI fun this year. Experts are growing optimistic about Nvidia, and prominent investors are flocking to the company as it controls the market for graphics processors suited for difficult computational operations required to power AI applications.

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The more individuals who use AI-powered chatbots like ChatGPT, the more computer-power firms building these products will require to provide replies to the millions of inquiries received from stressed-out students or slacker developers.

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Major technology companies like Microsoft Corp. and Google Inc. are competing to integrate generative AI elements into their services and products. According to The Information, Microsoft, the owner of Windows software, is creating its own AI processor to power the large-language models, citing two anonymous sources with direct knowledge of the project.

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Nvidia shares hit a year high of $281.10 after paring some premarket gains Tuesday following The Information article.

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Analysts have given the Santa Clara, California-based firm 43 buys, 13 holds, and no sell recommendations. Analysts' average price objective of $283.86 shows that they believe the stock will continue to rise over the next 12 months. The average estimate is 5.1% higher than the stock's most recent finish of $270.02.

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