Nvidia: A Top Pick in the Large-Cap Space


In a recent report by Piper Sandler, it was revealed that Nvidia has replaced Advanced Micro Devices (AMD) as the top large-cap pick. The analysts, Harsh Kumar and Robert Aguanno, provided three key reasons for their increased bullishness on Nvidia.

Stronger Valuation and Offerings

One of the main reasons for Nvidia’s attractiveness is its “substantially more compelling” valuation when compared to AMD. Additionally, Nvidia’s offerings are considered stronger than those of its competitors. This combination gives Nvidia a competitive edge in the market.

Software Licenses and Market Potential

Another factor contributing to Nvidia’s positive outlook is the significant portion of overall revenue that can be attributed to software licenses. This offers an opportunity for Nvidia to expand its total addressable market. The analysts believe that this will be a driving force behind Nvidia’s growth in the future.

Optimism for the Future

Looking ahead to fiscal 2025, Kumar and Aguanno express optimism for Nvidia. They cite a “strong backlog coupled with demand tailwinds” as factors that will contribute to the company’s success. Additionally, they anticipate that a new chip in China will further boost revenues by the April quarter.

Valuations and Price Targets

In terms of valuations, the Piper Sandler team rates Nvidia as Overweight with a $620 price target. This is based on a multiple of 29 times its expected 2025 earnings. In comparison, AMD is also rated as Overweight but with a lower price target of $150, based on a multiple of 43 times its expected 2024 earnings.

Wall Street Support

Nvidia has gained significant support from Wall Street, with 94% of analysts surveyed by FactSet giving it a Buy rating. In contrast, AMD has a Buy rating from 70% of analysts. This further solidifies Nvidia’s position as a top pick in the industry.

Stock Performance

As of Monday’s trading session, shares of Nvidia and AMD were down 1.6% and 1.3% respectively. However, it’s important to note that both stocks have experienced significant growth, with Nvidia soaring 220% and AMD rising 87%.

In conclusion, Nvidia has emerged as the preferred choice in the large-cap space, surpassing its competitor AMD. With a stronger valuation, compelling offerings, and a positive outlook for the future, Nvidia is positioned for continued success.

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