There's no denying the impact of artificial intelligence (AI) on the tech world since early last year, and Nvidia (NVDA +3.75%) has been among the primary beneficiaries. The company's graphics processing units (GPUs) supply the computational horsepower that underpins AI, pushing the stock to greater heights, resulting in a high-profile stock split.
In a keynote address this past weekend ahead of the Computex trade show in Taiwan, CEO Jensen Huang laid out Nvidia's game plan for the next couple of years, which made one Wall Street analyst even more bullish.
NASDAQ: NVDA
Key Data Points
You can't spell gains without AI
Bank of America analyst Vivek Arya called Nvidia a "top pick," reiterating his buy rating on the stock and raising his price target to $1,500. That represents potential gains for investors of 37% over the coming year compared to the stock's closing price on Friday.
"Our company has a one-year rhythm," Huang said. "Our basic philosophy is very simple: Build the entire data center scale, disaggregate and sell to you parts on a one-year rhythm, and push everything to technology limits."
The analyst noted that with this statement, Nvidia is essentially accelerating its product upgrade cycle from two years to one year. This will "continue to bolster Nvidia's AI leadership position," according to Arya.
The evidence suggests the analyst is on to something. During his keynote, Huang said Nvidia planned to unveil a Blackwell Ultra processor in 2025, with its next-generation Rubin platform slated for release in 2026. The first Blackwell processors are slated for delivery beginning later this year, replacing the wildly popular Hopper generative AI chips.
This relentless pace of innovation keeps Nvidia ahead of the competition. In its fiscal 2024 (ended Jan. 28), the company spent nearly $8.68 billion -- more than 14% of its total revenue -- on research and development. This has helped Nvidia maintain its sizable technological lead on its rivals, which shouldn't be changing anytime soon.
Nvidia stock is selling for 42 times forward earnings, a premium that's supported its triple-digit revenue growth, making the stock a buy.
