Nvidia stock has another 125% upside as 'Mother of all cycles' looms, Wall Street firm says

• Even after Nvidia's 234% year-to-date rally, the stock still has plenty of upside left, according to a note from Rosenblatt.
• Rosenblatt set a Wall Street-high price target of $1,100 for Nvidia, representing potential upside of 125%. 
• "Nvidia affirms our view of a Mother of All Cycles thesis to the semiconductor industry," Rosenblatt said.

Think Nvidia's monster year-to-date rally of 234% has gone too far? Think again, according to a recent note from Rosenblatt Securities. 

Rosenblatt set a Wall Street-high price target of $1,100 for Nvidia after its strong second-quarter earnings report, representing potential upside of 125% from Tuesday's close. Such a surge would send Nvidia market valuation to well over $2 trillion. The firm's prior price target for Nvidia was $800.

Rosenblatt's semiconductor analyst Hans Mosesmann said Nvidia has affirmed his view of a "Mother of All Cycles" hitting the semiconductor industry, driven by strong demand for AI and high-performance computing.

"Nvidia's epic print and guide two quarters in a row is simply unprecedented and just getting started," Mosesmann said. "Jensen made the case that looking at the data center installed base of $1 trillion, most of it will shift to accelerated computing from general purpose compute for generative AI models. Edge AI, automotive, enterprise, networking, and software are just gravy."

Nvidia's third-quarter revenue guidance of $16 billion won't be the end of Nvidia's epic growth cycle, as Mosesmann expects the company to see accelerating growth "well into calendar 2024 as supply is expected to increase quarterly."

And a slew of product rollouts from Nvidia, including the Hopper HGX and DGX platforms and the Arm-based Grace-Hopper super chip, sets the stage for an inflection point as Nvidia uses the Grace CPU to "divorce" from the x86 CPUs that are manufactured by Intel and AMD.

"New platforms like Hopper, L40S, and Grace-Hopper will drive further inflections," Mosesmann said. "Nvidia's unmatched software capabilities and exposure to secular AI and data center tailwinds reinforce its position as a top secular grower even amidst competition."

Rosenblatt's $1,100 price target is based off of Nvidia seeing "unconstrained" 2025 earnings per share approaching the high $20s, and applying a "reasonable" 40x price-to-earnings multiple.

"Nvidia remains our top conviction idea following epic results and guidance showing accelerating momentum. With data center and AI inferencing opportunities massive and most of the $1 trillion server market shifting to accelerated computing, Nvidia is poised for multi-year growth as supply extends," Mosesmann said.