BMO Turns Bullish On Nvidia, Says It's Uniquely Positioned For Computing Shift

A BMO Capital Markets analyst left the sidelines on NVIDIA Corporation NVDA Monday.

The Nvidia Analyst

Ambrish Srivastava upgraded Nvidia from Market Perform to Outperform and hiked the price target by about 50% from $285 to $425.

The Nvidia Thesis

Continued execution on the data center side along with Nvidia's latest product rollout has helped improve sentiment toward the stock, Srivastava said in a Monday upgrade note. (See his track record here.)

"We believe NVIDIA is uniquely positioned to continue to benefit from a massive shift in the compute landscape," the analyst said.

The compute landscape started to shift over the last two to three years, and the shift likely to accelerate further as the type and size of workloads that can be handled by data center continue to grow, he said.

The workloads range from AI to data analytics to genomics, Srivastava said.

The GPU segment — and what Nvidia has done with its GPU and software architecture — position the company uniquely to be the "prime beneficiary" over the next five years from shifting trends, the analyst said.

BMO expects the Mellanox acquisition to make Nvidia even more formidable in the data center market.

The A100 data center GPU has helped the company pull well ahead of the competition, the Srivastava said.

The new Ampere architecture is a much bigger market opportunity where the company can build on its success in training, the analyst said.

"We do not see any reason why the company cannot grow its datacenter business to at least a $20B annual run rate vs. the $4.8B we are modeling for this year," BMO said, projecting long-term EPS of $20.