Chip demand is "off the charts," and industry leader Nvidia's performance could far exceed general expectations.
On Monday, Bernstein analysts calculated a more optimistic actual performance for Nvidia based on the latest spending plans for artificial intelligence revealed by cloud computing manufacturers.
The analyst team compiled their estimates of Microsoft, Meta, ByteDance, and Google AI chip expenditure growth. They found that orders from just these four companies would be enough for Nvidia to meet its guidance targets for this quarter. At the same time, they anticipate more optimistic demand for Nvidia from other large tech companies and artificial intelligence startups.
Bernstein analysts said that the current limiting factor for Nvidia's revenue is the advanced chip packaging capability of semiconductor foundries. With the increase in packaging capabilities next year, Nvidia could potentially generate between $75 billion and $90 billion in data center and AI chip revenue in 2024, far exceeding Wall Street analysts' consensus forecast of $42 billion.
However, the Bernstein tech analyst team downplayed the short-term and medium-term risks that might result from an overabundance of AI infrastructure construction, such as a boom and subsequent decline in demand for Nvidia chips.
They have upgraded Nvidia's stock rating to "outperform" with a target price of $475. Currently, Nvidia's stock price is around $467.
The Bernstein team said that for a quite long time in the future, at least in the next 12-18 months, they expect Nvidia's performance to maintain growth and potentially continue to rise. This analysis demonstrates an optimistic attitude towards Nvidia's future development.
Previously, Mizuho analyst Vijay Rakesh also pointed out that AI offers Nvidia more upside for its stock price than imagined, raising Nvidia's target price from $400 to $530.
