Barclays Upgrades Nvidia, Says AI Opportunity Is Too Big To Ignore

NVIDIA Corporation NVDA has its toes in a number of high-growth markets at the moment, but one Wall Street analyst says its leading position in artificial intelligence technology is what makes the stock a buy.

The Analyst

Barclays analyst Blayne Curtis upgraded Nvidia from Equal Weight to Overweight and raised his price target from $265 to $280.

The Thesis

There are simply too many things to like about Nvidia at the moment to question its lofty valuation, Curtis wrote in a note.

“We see a strong gaming/Volta cycle ahead, which should help mitigate any near-term crypto risks, while our work suggest the AI franchise is more durable in the Data Center with some Edge opportunities (Auto, robots, etc) where NVDA brings an unparalleled scale,” Curtis said in the upgrade note.

He conceded that cloud hyperscale will be one area in which Nvidia will likely face intense competition in coming years. However, Curtis said Nvidia has already created a wide moat in the massive auto market and is looking to do the same in robotics.

Barclays estimates the machine learning market will reach $3.8 billion in 2018 and the overall AI market could be in the tens of billions annually by 2020 thanks to the power of inference. Between training, data center inference and Edge inference, Curtis estimates the total addressable market for the semiconductor group will grow from around $4 billion in 2018 to around $30 billion by 2023.

Price Action

Nvidia stock traded higher by 1 percent  to the $229 level on Thursday morning on a weak day for stocks.

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