Call of the week: Buy Nvidia, shares are set to rally

It’s a bull versus bear battle over one of the Street’s hottest stocks, Nvidia. The chipmaker’s stock, which more than tripled in value in 2016, has rallied about 225% over the past year compared to the S&P 500’s 15% return. Now there’s a disagreement about where shares are headed next. Bank of America and Citi both think there’s still plenty of upside ahead, while Citron Research is calling for a significant drop.

Bank of America raised its price target on the chipmaker to a Street high of $185 a share, topping Citi’s previous Street-high call on Thursday by $5 a share. Both banks think the progress the chipmaker has made revolutionizing its business will continue to pay off.

In a research note on Thursday, Citi analyst Atif Malik wrote, “Nvidia continues to transform itself from a PC to a diversified gaming, data center and auto software platform and is benefiting from secular trends such as VR/AR, deep learning, AI and autonomous driving.” Malik also made a bullish case for the stock, saying its value could double over the next year to $300 a share.

Bank of America analyst Vivek Arya echoed Malik’s comments, noting that he expects strong upside to the Street’s second-half and 2018 estimates, driven by demand for its graphics processing units (GPUs). Arya’s previous price target on Nvidia was $155.

But it’s not just the bulls that are having an impact on Nvidia’s stock this week. Well-known short-seller firm Citron Research, which is run by Andrew Left, poured cold water on Nvidia’s rapid rise. The firm tweeted Friday that Nvidia’s stock will drop almost 20% before trading near the Street-high targets.

Nvidia has a total of 18 buy, 12 hold and five sell ratings on the stock, according to Bloomberg.

 

What to read next

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes