NVIDIA’s Next-Generation GPU Could Propel Stock to New Heights

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NVIDIA, a prominent semiconductor manufacturer, has experienced a temporary slowdown in recent months. However, analysts at Citi believe that the next generation of the company’s graphics-processing units (GPUs) could reignite its momentum sooner than expected.

Despite a near-tripling in value this year, NVIDIA’s stock has remained relatively stagnant in recent times. This could be attributed to investors already factoring in the success of NVIDIA’s H100 GPU, which has become a highly sought-after chip for artificial intelligence applications.

According to Citi analyst Atif Malik, a potential catalyst for further growth lies in the release of NVIDIA’s next-generation B100 GPU, also known as Blackwell. While the company’s normal production schedule would place this release in the second half of 2024, there is a possibility that NVIDIA will expedite its timeline to meet increasing demand and counter competition.

Malik believes that the B100 GPU has the potential to be an even more significant game-changer in the AI field compared to its predecessor. This technological advancement could drive up NVIDIA’s Average Selling Prices (ASPs), sales, and margins.

One key factor contributing to the B100’s potential is if NVIDIA adopts Taiwan Semiconductor Manufacturing’s (TSM) highly advanced 3-nanometer manufacturing process. Furthermore, the implementation of ‘chiplet’ stacking technology, which combines multiple small chips, could further propel the B100’s capabilities.

Atif Malik has assigned a Buy rating and set a target price of $630 for NVIDIA shares. This valuation is based on a price-to-earnings multiple of 35 times the company’s projected 2025 earnings. As of premarket trading on Monday, NVIDIA shares had risen by 1.3% to $440.43.

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