NVIDIA Corporation NVDA's investor day presentation Tuesday was followed by a nearly 8-percent decline in the stock, but reaffirmed the bull case for the company, according to Bank of America Merrill Lynch.
The Analyst
Bank of America's Vivek Arya maintains a Buy rating on Nvidia's stock with an unchanged $300 price target.
The Thesis
Nvidia's analyst day attracted 8,500 attendees a fourfold increase from five years ago, Arya said in a Wednesday note. (See the analyst's track record here.)
The company's presentation focused on three areas, Arya said: data center, gaming and autonomous driving. Here are some of the analyst's takeaways on each of the three business segments.
Data Center
- Nvidia's total addressable market opportunity was estimated to be $50 billion versus $30 billion last year.
- The company boasts multiple structural advantages and differentiated products, including the new DGX-2 supercomputer-in-a-box.
Gaming
- Nvidia's gaming sales growth through 2020 should come at an annual rate of 19 percent.
- Only 30 percent of the installed base has upgraded to Pascal, which implies "significant runway" for user upgrades.
Autonomous Driving
- Management believes autonomous vehicles represent a $60-billion TAM by 2035.
- Nvidia's car opportunity is "incremental to its infotainment business."
- The company's products are powerful enough to address future needs, including collecting data, training models, and conducting simulations.
Price Action
Shares of Nvidia were trading lower by more than 2 percent at the time of publication Wednesday.
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Photo courtesy of Nvidia.
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