Shares of NVIDIA Corporation (NASDAQ: NVDA) plunges over 1.12% to $273.70 in pre trading session on Wednesday following a “buy” recommendation from HSBC, the company extended a months-long surge. HSBC Head of Technology Research Frank Lee stated in a client letter that his firm was “throwing in the towel” on a prior “reduce” recommendation for Nvidia.
“We were too focused on the slowdown in datacenters, but what really surprised us was its pricing power on AI chips,” noted Lee. “In particular, we are astounded by Nvidia’s pricing power on A.I. chips, which we believe is driving earnings growth and higher valuation.”
According to Refinitiv data, Lee was the only one of roughly 50 analysts covering Nvidia who gave the chipmaker a negative rating. He has raised his price estimate for Nvidia from $175 to $355.
Nvidia ranks among the top-performing equities in the S&P 500, having gained more than 90% this year. It has recovered almost 150% from its October low, but shares are still down nearly 17% from record highs in November 2021. Investors are largely expecting Nvidia to be a prominent role in the emerging wave of A.I. computing. According to HSBC, NVIDIA will have a 90% market share in fiscal year 2024.
With a market valuation of $687 billion, Nvidia has surpassed Google’s Alphabet, Amazon, and Microsoft to become the fifth most valuable firm on Wall Street.
The majority of Nvidia’s gains have occurred in the last three months, following the public launch of the AI-powered chatbot ChatGPT in late November, which sparked renewed interest in so-called generative AI and how it could revolutionize services such as internet search, product design, writing, and programming.
The new technology necessitates significant computational capacity in data centers, where Nvidia has already established a sizable and expanding market for its graphics chips and AI software. The business made several announcements on Tuesday as part of its annual GTC developers conference, the majority of which focused on generative AI potential.
