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NVIDIA (NASDAQ:NVDA), the pre-eminent graphic cards maker, has transformed into a unidirectional play as its shares keep traversing a seemingly endless upward ramp. This incessant bullish rally has resulted in year-to-date gains of over 130 percent, based on yesterday’s all-time high closing price of $552.84.
Today, NVIDIA investors have received a fresh impetus following a chorus of stock price upgrades from Wall Street behemoths. To wit, Bank of America (NYSE:BAC) has come forward today with a new street-high stock price target of $650 for NVIDIA shares, up from the earlier peg at $600. BofA analyst, Vivek Arya, retained a ‘Buy’ rating for the stock while noting:
"The main takeaway from NVDA's Ampere gaming event held earlier is that mainstream RTX 3080 and 3070 cards (which per NVDA have [the] largest inter-generational performance boost, 2x+ vs. Turing and Pascal) are priced at $699 and $499, which is unchanged from their prior-gen Turing versions, and are $100 cheaper than the speculated $799/$599 pricing ahead of the event."
On the flipside, Arya notes that, at $1,499, the price of the top-of-the-line RTX 3090 card is around 25 percent higher than the corresponding previous-gen 2080 Ti card. BofA analyst also pointed out the fact that these next-gen cards will be manufactured using Samsung’s 8nm process instead of TSMC’s 7nm one. However, the Wall Street giant observes that the data-centric Ampere products will still be manufactured by TSMC.
As far as the financial implications are concerned, Arya postulates that NVIDIA’s new offerings will "drive a solid replacement cycle" as around 75 percent of the company’s existing customer base is still using Pascal or other older-gen cards. This translates to an upside potential of 15 percent in FY 2021 and around 8 percent in FY 2022 for the gaming segment’s revenue.
As stated earlier, a number of Wall Street powerhouses have come forward with stock price hikes for NVIDIA recently. The chart below illustrates this development:
(All figures represent stock price targets)
As a refresher, at a dedicated event yesterday, NVIDIA removed the wraps from its next-gen RTX 30 series graphic cards. As per the company’s announcement, the RTX 3080 cards will start retailing on the 17th of September. Similarly, the GeForce RTX 3090 cards will hit the shelves on the 24th of September. Lastly, the GeForce RTX 3070 will be available in October. For a detailed overview of the specs and prices of these next-gen cards, head to our dedicated post.
Of course, NVIDIA investors are also eagerly waiting for any development when it comes to the company’s ongoing negotiations with the chip designer ARM and its owner, the Japanese giant SoftBank. We reported back in August that NVIDIA remains the top contender as SoftBank weighs a multitude of options for ARM. Moreover, as per the exclusive reporting by UK’s Evening Standard, NVIDIA has entered final talks for acquiring ARM, with a potential deal emerging before the end of the current summer season. According to the report, SoftBank’s CEO Masayoshi Son is demanding a price as high as £40 billion ($52 billion) for ARM. This translates to a premium of around $20 billion relative to the $32 billion that SoftBank paid in 2016 to acquire ARM.