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Nvidia is showing shades of Apple and its stock could hit $625, says one new bull


Nvidia Corp. continues to rack up bullish endorsements as analysts contemplate the vast opportunities ahead for the leader in artificial-intelligence chips.

Nvidia
NVDA,
+0.70%

“is the obvious flagship AI company, whose decisions over the last two decades have positioned it for long-term benefits,” wrote Melius Research analyst Ben Reitzes, who initiated coverage of the stock late Monday with a buy rating and $625 price target.

The company is reminding him of Apple Inc.
AAPL,
-0.43%

“with a full-stack approach that in our experience tends to deliver an outsized profit share in the industry for longer than expected once the ball starts rolling downhill due to developer support and becoming an industry standard.”

See also: Nvidia’s stock could have a pathway to $600, Citi says

While Nvidia shares have soared more than 200% so far this year as the now-trillion-dollar company has solidified its AI positioning in Wall Street’s mind, Reitzes suggests would-be investors haven’t missed the boat.

“On the rare occasion a company like this comes along, we caution investors not to get caught up in [an] arbitrary market-cap milestone and [to instead] focus on sustainable long-term earnings power,” he wrote. “Apple has also shown us … sometimes the consensus can keep being right — and keep working when the business model is right.”

Read: Nvidia could follow ‘blowout’ outlook with more massive upside, analyst says

Meanwhile, BofA Securities analyst Vivek Arya became more upbeat about Nvidia’s stock Tuesday, boosting his price objective on the stock to $550 from $500 while keeping a buy rating.

The upcoming earnings season could lead chip stocks to diverge between the “haves” and “have-nots” of AI, and Arya likes Nvidia’s stock setup even more in that scenario.

“The next few quarters could see greater dispersion among chip stocks based on real vs. overstated/perceived AI benefits,” Arya wrote Tuesday, calling Nvidia a player that “can hold its dominance.” He expects the company to keep a 75% to 80% share of the market for accelerators.

More from MarketWatch: Amazon, Microsoft and Google cloud services bet heavily on AI, but do their customers even want it?

Arya noted that Nvidia’s accelerators for servers are critical to driving intensive AI workloads and that the market opportunity is still ripe, since only around 10% of cloud servers are currently “accelerated,” adding that “we are in just the early stages of AI investment.”

He also highlighted that Nvidia houses other AI products including networking and software offerings that can help customers position themselves for the world of AI.

Read: AMD may suffer from elevated expectations — but Wells Fargo is warming to Intel’s setup



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