The Stock of Nvidia Has Been Dubbed a Top Pick for Next Year After Monster 2023

TD Cowen analyst Matthew Ramsay has identified Nvidia Corp. as his top chip stock pick for 2024, noting that the company has already experienced a remarkable 220% gain in the current year. Despite the substantial growth, Ramsay delivers a straightforward message to Wall Street: "No need to overthink this."

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Nvidia has solidified its position as a key player in the artificial intelligence (AI) revolution, serving as the backbone for companies eager to integrate AI into their operations. With the increasing popularity of ChatGPT, businesses are rapidly adopting AI, and Nvidia's hardware plays a crucial role in enabling this transition.

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Ramsay's note to clients emphasizes the simplicity of the choice: "Just 'cause it's obvious, doesn't mean it's wrong." He underscores Nvidia's dominance in the early stages of a significant shift toward widespread accelerated computing and generative AI, labeling the company as the leader in one of the most consequential growth vectors in computing history.

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The explosive growth in Nvidia's data-center business this year has caught Ramsay's attention, and he envisions the potential for further expansion. According to him, Nvidia's combination of superior technologies, a long history of innovation, and strategic growth-focused investments positions the company for sustained, above-peer growth across various AI verticals.

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Ramsay expects Nvidia's momentum to increase, fueled by an accelerating product roadmap and innovation across all aspects of the AI workload, including training, inference, and data processing. While acknowledging that rival Advanced Micro Devices Inc. has a "highly competitive" MI300X product, Ramsay believes the total addressable market for AI hardware is substantial enough for both companies to thrive.

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The analyst contends that investors are not fully appreciating Nvidia's capacity to sustain demand through 2025 and beyond. Ramsay argues that generative AI spending is more resilient than many investors perceive, and Nvidia's strategic shift to sell complete systems, rather than just chips, opens up even greater opportunities for the company.

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With an optimistic outlook, Ramsay assigns an outperform rating and sets a $700 target price on Nvidia shares, emphasizing the confidence he has in the company's continued success in the dynamic landscape of AI and accelerated computing.