BofA Reiterates Buy on NVIDIA, $275 PT
BofA Securities analyst Vivek Arya reiterated a Buy rating and $275 price target on Nvidia.
“Privately held Groq announced it has entered into a non-exclusive licensing agreement for its AI inference technology with NVDA.
Media reports suggest the potential deal could be worth as much as $20bn, with key members of Groq’s management team to join NVDA.
Key takes:
1) Surprise news, right before Christmas, involves a very different kind of hardware called LPU (language Processing Unit) versus NVDA’s well-regarded GPU expertise/focus ;
2) Implies NVDA recognition that while GPU dominated AI training, the rapid shift towards inference could require more specialized chips;
3) Different hardware adds complication around future GPU/LPU roadmap and pricing, but would enable NVDA to leverage its balance sheet and platform incumbency to add more customer choice and conceptually address competitive threats from Groq and other specialized ASIC chips.
Overall, we maintain Buy, top sector pick and $275 PO on NVDA.”
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