Rosenblatt bullish on NVIDIA's strategic shift; stock holds buy rating

Rosenblatt bullish on NVIDIA's strategic shift; stock holds buy rating

On Monday, Rosenblatt reiterated a Buy rating on shares of NVIDIA Corporation (NASDAQ: NVDA ), maintaining a price target of $1,400.00.

The firm anticipates NVIDIA to outperform expectations and raise its outlook for the April quarter, albeit with results that may not match the highs of the January quarter. This projection is based on improved supply conditions and despite facing tougher year-over-year comparisons.

NVIDIA is currently dealing with shortages of CoWoS and HBM components. The CoWoS shortage is expected to ease as the year progresses. Rosenblatt does not foresee an "air-pocket" in demand during the transition from Hopper to Blackwell in the July quarter, as the transition to the B100 chip is planned for later in 2024.

It is the subsequent transitions to B200 and GB200, slated for release in 2025, that are expected to bring significant generational shifts.

Despite expectations that NVIDIA will lose some unit market share to competitors such as custom ASICs, AMD (NASDAQ: AMD )'s MI300X, and Intel (NASDAQ: INTC )'s Gaudi 3, the company is predicted to maintain or even grow its market share in terms of sales and value. This is attributed to NVIDIA's focus on platform and software stack, including service vectors like Omniverse, digital twins, and AI foundry.

NVIDIA's strategic shift toward a more software-centric business model, emphasizing software intellectual property (SW IP), is seen as a significant development. This change is aimed at extracting more value across the entire stack, which could indicate potential growth for the company.

Although market volatility is expected leading into this week's financial report, Rosenblatt's outlook on NVIDIA remains positive, citing the company's alignment with the best secular idea in technology.

InvestingPro Insights

InvestingPro data highlights NVIDIA Corporation's impressive financial performance and market position. With a staggering revenue growth of 125.85% in the last twelve months as of Q4 2024, NVIDIA is not only expanding rapidly but also maintaining a robust gross profit margin of 72.72%. The company's operating income margin at 54.12% indicates efficient management and profitability. Additionally, NVIDIA's significant 195.9% one-year price total return reflects the market's strong confidence in its growth trajectory.

Two InvestingPro Tips that resonate with Rosenblatt's positive outlook are NVIDIA's sustained sales growth anticipation and its status as a prominent player in the Semiconductors & Semiconductor Equipment industry. These aspects suggest that NVIDIA's strategic initiatives and market performance are aligned with analysts' expectations for continued success. For investors seeking a more comprehensive analysis, there are over 20 additional InvestingPro Tips available, providing deeper insights into NVIDIA's market dynamics and investment potential. To access these tips and enhance your investment strategy, consider using the promo code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

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