The Bull Case For Nvidia: $300 Per Share?

NVIDIA Corporation NVDA shares are up more than 700 percent over the past three years, but investors may have plenty of upside ahead. In fact, Nvidia stock may still double from here, according to Citigroup analyst Atif Malik.

Plenty Of Upside Ahead?

Nvidia is still in the early stages of a transformation from a PC GPU company to an artificial intelligence platform, a transition that could generate substantial growth in years ahead, Malik wrote on Thursday.

“Looking forward, we believe stock is not pricing in a) continued growth in data center sales where C17 sales are still ~7 percent of the projected $30B CY20 opportunity, b) auto inflection in C18 driven by NVDA’s open source automated vehicle (AV) stack and increased traction with car OEMs this year; and c) multiple expansion to “software like” IaaS + basic PaaS comps on AI democratization with GPU Cloud offering,” Malik wrote.

Related Link: A Look At Nvidia's Largest Shareholders And What Their Presence Means

In addition, he said there is plenty of room for Wall Street upgrades to generate positive headlines, as about half of the firms that cover the stock have either Hold or Sell ratings in place today.

Citi has raised its bull case scenario price target for Nvidia to $300, more than double the stock’s closing price on Wednesday. The bull case assumes $24 billion in sales and $8.50 in EPS from the company. However, Malik conceded downside risks as well. Citi’s bear case scenario of $100 per share represents roughly 33 percent downside and assumes slowing sales growth and multiple contraction to a PE of 25x.

Citi maintains a Buy rating on Nvidia and a base-case price target of $180.

At last check prior to publication, shares of Nvidia were up 3.14 percent at $153.8. ________ Image Credit: By NVIDIA Taiwan - https://www.flickr.com/photos/nvidia-taiwan/19113730754, CC BY 2.0, via Wikimedia Commons