Nvidia (NVDA) - Get Report was climbing Wednesday after analysts at Bernstein returned to their bullish stance on the stock, raising its rating to outperform while also increasing its price target to $360 from $300 a share.
The new price target represents a potential upside of 21% from the stock’s closing price Tuesday of $296.57.
Bernstein noted that it initiated coverage of Nvidia in May 2017 with a bullish view, but since then the company has experienced headwinds including “the cryptobubble, a lackluster Turing gaming cycle, and a significant hyperscale digestion phase.”
However, “with the stock almost exactly back to prior peak levels, it is obvious that not growing more constructive, sooner, was an error. But while that peak (in hindsight) was built on a shaky foundation, the current situation seems much more stable with a ‘clean’ (no crypto) gaming profile, improved Turing traction, and return to hyperscale builds.”
But there are risks to the bullish view, including datacenter cyclicality and the coronavirus. But those potential headwinds aren't enough to slow down Nvidia, the analysts said.
"Gaming is standing on its own now (without crypto muddling it up). Where the initial Turing launch was lackluster, that product cycle has found some legs, and the forthcoming Ampere cycle is likely to further solve the performance issues that stood in Turing's path. Further we are through the hyperscale digestion, with a build cycle now in the works. Had these all been true 16 months ago we suspect the stock would have continued its rise,” the analysts said.
Nvidia shares were rising 2.3% to $303.51 in trading Wednesday.