Goldman Sachs is bullish on Nvidia (NASDAQ: NVDA).
The firm boosted its price target for the chipmaker form $179 to $192 this week, citing momentum in Nvidia’s gaming business. That price target would see the stock just over 8% higher from the current price.
“We expect the company to deliver strong sequential growth in FY3Q (Oct) in the Gaming segment supported by the normalization in channel inventory and the launch of its new products,” Goldman analyst Toshiya Hari wrote in a note to clients.
Nvidia’s gaming business is its largest segment and brought in $1.3 billion in revenue in the company’s second quarter. While the landscape has been competitive, Hari believe Nvidia’s gaming segment will continue to prosper.
“In the medium- to long-term, the emergence of cloud gaming and any impact it may have on PC gaming growth will likely remain top of mind for many investors,” the analyst wrote. However, “comments from Gigabyte/MSI appear to support our view that latency alone will be a bottleneck for broad-based adoption among Nvidia’s target customer base.”
The chipmaker’s second largest segment is its data center business. The data center business came in below estimates at $655 million for the second quarter, but Hari believes improving trends will drive the segment’s growth moving forward.
“We see you segment revenue growth reverting to positive territory in FY4Q (Jan) and accelerating further into 1HFY21,” Hari wrote.
Goldman’s Hari isn’t the only analyst optimistic about Nvidia.
On Monday, SunTrust Robinson Humphrey analyst William Stein reaffirmed his Buy rating on the stock and boosted his price target to from $210 to $216 – 22% higher than the current price.
“We expect NVDA’s stock to outperform owing to superior positioning in [the] gaming, server acceleration/AI, [and] autonomous driving” markets, Stein wrote.
The SunTrust analyst says his industry contacts believe demand is improving across Nvidia’s end markets, and also noted that the chipmaker is being more aggressive with its suppliers on pricing, which could lead to higher profit margins in the coming quarters.