Nvidia (NVDA -0.58%) shares have rocketed 76% year to date, but the demand for the company's data center chips could still support new highs, according to analysts at KeyBanc.
After digging into Nvidia's supply chain, the firm sees evidence of strong demand for Nvidia's GB200 super chip designed for artificial intelligence (AI). KeyBanc maintained an overweight (buy) rating on the shares but raised the price target from $1,100 to $1,200, representing an upside of nearly 38% over the next 12 months or so from the current share price of around $871.
Why buy Nvidia stock
After a year of 200%-plus revenue growth, Nvidia's data center business is now over three-quarters of the company's revenue. The company won't maintain that level of growth forever, but Wall Street expects revenue to remain robust over the next few years.
Nvidia has a strong pipeline of new technologies coming out to drive more demand for its industry-leading chips. KeyBanc's analysts believe demand for Nvidia's GB200 rack computing systems, which bring together the company's Grace CPUs and Blackwell GPUs, will be in high demand and could command average selling prices between $1.5 million to $2 million.
All up, Nvidia's GB200 could generate between $90 billion to $140 billion in annual revenue. This seems to line up with the consensus estimates that call for Nvidia's total revenue to reach $160 billion by calendar 2026.
Barring anything that could derail the broader recovery in the semiconductor industry, Nvidia stock should hold up and could very well hit the analyst's price target within the next year or so.
