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NVIDIA Stock Is "Going Into Overdrive," Says Analyst

By Joe Tenebruso – Oct 7, 2020 at 2:02PM

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The chipmaker could deliver handsome returns to investors.

Shares of NVIDIA (NVDA -2.30%) are headed to new all-time highs.

So says BMO Capital analyst Ambrish Srivastava. On Tuesday, he lifted his price forecast on the tech titan's stock from $565 to $650. His new target represents potential gains to shareholders of 16% from NVIDIA's current share price near $560. 

Srivastava says NVIDIA's stock remains a buy as its pace of innovation goes into "overdrive." He posits that the chipmaker's new product launches will help to significantly expand its long-term market opportunity.

A steadily rising chart represented by progressively taller glass containers.

BMO Capital analyst Ambrish Srivastava sees more upside ahead for NVIDIA's shareowners. Image source: Getty Images.

NVIDIA, for its part, pegs its total addressable market at more than $100 billion. With large and growing opportunities in areas such as gaming, healthcare, and edge-computing platforms, the semiconductor leader has tremendous room for expansion still ahead. 

Wall Street expects NVIDIA to grow its earnings per share by more than 17% annually over the next five years. At Srivastava's $650 target price, NVIDIA's shares would trade for roughly 59 times its projected earnings in fiscal 2022. That's a bit rich but certainly not unachievable, particularly in the current low-interest rate environment that's driving many investors to seek out higher returns in high-growth stocks.

Thus, Srivastava's $650 price forecast seems reasonable -- and he's likely correct that NVIDIA's stock is a solid buy today.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.

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