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The analysts, who have an Outperform rating and a $320 price target on the stock, explained that the rise of generative AI has “clearly been a large driver of NVDA’s outperformance YTD, led by the launch of ChatGPT in November 2022.”
“Now only 4 months after ChatGPT’s introduction, we are starting to see the ramp of Auto-GPT, an experimental application which chains together LLM “thoughts” to autonomously achieve goals set by a user (i.e., create a new recipe, start and operate a new business, create a podcast based on recent news, etc.) – making ChatGPT’s functionality almost appear archaic,” they said, adding that the firm believes it is “a major evolution for generative AI.”
Nvidia is the world’s leading designer of computer chips used in creating artificial intelligence, and while Evercore ISI believes it is difficult to quantify the opportunity in AI, the analysts stated they believe it is a “very big deal for NVDA given both the rapid pace of innovations within AI and the exponential advance in compute requirements best suited for GPUs (particularly evidencing the vast inference opportunity) across both Training and Inference.”
“Overall, breakthroughs such as this only increase our confidence in NVDA’s long-term model and positioning,” the analysts wrote. “While the stock has had a massive run-up YTD, we believe that we are clearly still in the very early innings of AI proliferation. As such, NVDA remains a Top Pick with plenty of room to run from here as NVDA’s opportunity morphs from a % of cloud capex to a % of worldwide IT spend.”
