Should You Buy Nvidia Stock Now? A Potential Once-in-a-Generation Opportunity

Nvidia has become one of the most talked-about stocks in recent times as its success closely ties to the overall market, especially with the rise of artificial intelligence (AI). Investors have particularly focused on Nvidia due to its leadership in AI chip production.

This year, Nvidia's stock has significantly influenced the S&P 500, contributing to over a third of the index's gains. Some investors even celebrated its earnings releases with watch parties, highlighting the excitement surrounding the company.

However, the impressive rise of Nvidia to a $3 trillion valuation has generated debate on Wall Street. Many analysts question whether the stock can maintain its growth, while others believe that the AI revolution will drive its continued success. As a result, potential investors are left pondering whether it is the right time to buy or sell Nvidia stock.

Recently, analysts from Bank of America provided some clarity on this issue. They reiterated a 'buy' rating for Nvidia and adjusted their price target from $165 to $190 per share. This forecast suggests a potential increase of about 38% from the stock's closing price last Friday.

If Nvidia's stock reaches $190, its market capitalization could soar to approximately $4.7 trillion, an impressive leap from its current valuation of $3.4 trillion.

Bank of America is highly optimistic about Nvidia, referring to it as a "generational opportunity." Their analysts highlighted the vast total addressable market for AI accelerators, estimating it to be over $400 billion.

They also indicated that demand for AI models is rapidly evolving. The frequency of new large language model (LLM) launches is now increasing steadily, with major AI developers like OpenAI, Google, and Meta rolling out new models 3 to 5 times a year. With each new generation, the computational requirements for training these models increase by 10-20 times.

The positive sentiment towards Nvidia is further supported by observations from other chip industry leaders, such as Taiwan Semiconductor and ASML, who have both signaled strong demand in the AI sector. Moreover, discussions with executives from Broadcom, Micron, and AMD have revealed similar trends.

Nvidia's CEO, Jensen Huang, also expressed high expectations for the demand for their next-generation AI chip, known as Blackwell. On a recent CNBC interview, he stated, "Blackwell is in full production, Blackwell is as planned, and the demand for Blackwell is insane. Everybody wants to have the most, and everybody wants to be first."

Additionally, Bank of America pointed out Nvidia's strategic partnerships with notable companies like Accenture, ServiceNow, and Microsoft. These collaborations, combined with Nvidia's comprehensive software solutions, strengthen its position in the hardware space, fostering a robust ecosystem for AI.

Looking ahead, Nvidia could generate more than $200 billion in free cash flow over the next two years, putting it on par with major players like Apple.

With various tech giants set to report their earnings later this month, including Microsoft, Google, and Amazon, further insights into AI demand may emerge. Nvidia itself is expected to publish its earnings report on November 20.

Despite some skepticism from Wall Street regarding whether hefty investments in AI will translate into tangible profits, the tech industry remains fiercely competitive as companies race to innovate with the latest AI advancements.

Bank of America noted, "We continue to see the pace of new model development increase. LLMs, in particular, are evolving for both size and reasoning capabilities, which necessitate greater training intensity."

Nvidia, Stocks, AI