On Monday, HSBC analyst has increased the price target for NVIDIA Corporation (NASDAQ:NVDA), a leading technology company, to $1,350 from the previous target of $1,050, while retaining a Buy rating on the stock. The new price target is rooted in the forecasted earnings per share (EPS) for fiscal year 2026, which the analyst projects to be $45.16, an increase from the earlier estimate of $35.30.
The justification for the raised target price is linked to NVIDIA's anticipated product evolution, specifically the transition to an in-house central processing unit (CPU) and graphics processing unit (GPU)-based GB200 product. Additionally, a shift towards a product mix that features higher average selling price (ASP) B series is expected to contribute to the company's growth.
HSBC's target price-to-earnings (PE) ratio for NVIDIA remains unchanged at 30 times, which is calculated to be 0.5 standard deviations (SD) below the five-year historical average for the company's forecasted PE ratio for fiscal year 2026. This valuation reflects the firm's belief in NVIDIA's potential for a re-rating in fiscal year 2026.
The analyst's perspective indicates confidence in NVIDIA's future performance, with the new target price representing a substantial 52% upside from the current level. Despite setting the target PE below the historical average, HSBC's outlook for NVIDIA remains positive, as reflected in the maintained Buy rating.
InvestingPro Insights
Following HSBC's updated price target for NVIDIA Corporation (NASDAQ:NVDA), real-time data from InvestingPro shows a robust financial landscape for the tech giant. NVIDIA's market capitalization stands at an impressive $2.21 trillion, showcasing the company's massive scale in the technology sector. With a Price/Earnings (P/E) ratio of 74.44, the stock may appear expensive, but this is mitigated by the company's significant revenue growth, which was last reported at 125.85% year-over-year.
InvestingPro Tips highlight NVIDIA as a company that is expected to see sales growth in the current year. Analysts also note that NVIDIA is trading at a low P/E ratio relative to near-term earnings growth, suggesting potential value for investors considering the company's growth prospects. Moreover, NVIDIA's strong financial performance is further evidenced by a substantial gross profit margin of 72.72%, indicating efficient operations and profitability.
For investors seeking additional insights, InvestingPro offers a range of tips on NVIDIA, including the company's status as a prominent player in the Semiconductors & Semiconductor Equipment industry and its ability to maintain dividend payments for 13 consecutive years. With a total of 20 additional InvestingPro Tips available, users can gain a deeper understanding of NVIDIA's financial health and market position by visiting https://www.investing.com/pro/NVDA. To access these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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