Investors are highly anticipating Nvidia's (NVDA 1.02%) quarterly earnings report on Aug. 28. After recently sinking below $100 per share, Nvidia stock has surged by about 30% in just two weeks.
But one Wall Street analyst thinks there's more gains to come. In a new research report released Monday, Melius Research analyst Ben Reitzes said he thinks there's still time for investors to buy Nvidia stock, which he thinks will reach $160 per share. That would imply another 23% upside for shares of the advanced semiconductor company.
NASDAQ: NVDA
Key Data Points
AI spending will drive huge free cash flow
Spending to expand the use of artificial intelligence (AI) by both large and small tech companies has exploded. And Nvidia has been the biggest beneficiary to date. Management itself expects to report revenue of about $28 billion in its upcoming earnings report. That would be more than double the $13.5 billion the company reported in the prior-year period.
The company has handily beat its own revenue estimates in the latest string of earnings reports, so investors might be expecting more. Regardless of whether it meets or beats estimates, the Melius Research analyst sees enough market opportunity for Nvidia to realize soaring free cash flow in the near future.
Reitzes wrote in his research report that Nvidia "has the potential to deliver over $270 billion in free cash flow over the next 3 years. Given this surge in cash flow, it should be able to return an overwhelming amount of that cash to shareholders."
The recent run in Nvidia's stock likely has some good news from the upcoming earnings report already baked in, so investors shouldn't necessarily expect a spike in shares after the report. But longer term, strong net income and cash flow should continue, making it a stock worth owning.
