‘Time to Jump Back In,’ Says Gil Luria About Nvidia Stock

Nvidia (NASDAQ:NVDA) stock has been a massive beneficiary of the AI-driven bull market, standing out as one of the top beneficiaries. After all, the incredible demand for its AI chips lies behind its rise to the top of the market cap pile. However, while all of that has taken place, some have kept a cautious stance on the semi giant.

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D.A. Davidson analyst Gil Luria has been one these fencesitters, arguing that there are factors that merit a more nuanced view of Nvidia’s prospects. But only a fool is never willing to reassess a long-held position, and it appears the 5-star analyst has now changed his tune.

“We believe the growth in AI compute demand will drive enough demand to sustain NVDA’s growth into next year and likely beyond,” Luria explained. “While there are still several cross-currents, we believe those are not enough to change that trajectory and are upgrading to BUY from Neutral, raising our price target to $210 from $195.” That new target factors in a one-year gain of 18.5%. (To watch Luria’s track record, click here)

Essentially, Luria has become more optimistic about the trajectory of AI compute demand, which now outweighs his earlier concerns. Since the analyst believes AI will reshape work primarily through its impact on labor rather than just the IT stack, he expects compute demand to keep accelerating, even before enterprises begin to realize tangible returns on their investments.

That’s not to say all Nvidia’s potential headwinds have now disappeared. Luria still intends to keep an eye on issues such as hyperscaler capex trends and their impact on ROI and margins; rising competition from in-house ASICs such as Google’s TPUs, and the volatile and competitive landscape in China, which at its peak may have accounted for up to 25% of demand. Luria is also watching potential growth constraints tied to energy availability, TSMC capacity and data center build-outs, while overly optimistic expectations from both the company and the sell side should also be kept in check.

However, that all takes a backseat to the main reason behind Luria’s new bullish outlook. “The most important thing – the overwhelming growth in demand for compute – is the only thing that matters,” Luria adds. The analyst now expects Nvidia to sustain growth over the next two years, regardless of which business segment drives it. While not prepared to fully “endorse sell-side consensus” – particularly given the uncertainty surrounding China – Luria thinks investors are likely to look “through small misses,” much as they have in recent quarters. And that, the analyst sums up, will “continue to keep NVDA at the heart of the AI trade.”

Luria now joins 35 other NVDA bulls, while an additional 2 Holds and 1 Sell can’t detract from a Strong Buy consensus rating. The average price target stands at $211.11, suggesting the stock will gain 19% in the months ahead. (See Nvidia stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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