Bank of America retains Nvidia stock as Top Pick heading into CES next week

Investing.com -- Bank of America analysts on Wednesday reiterated Nvidia (NASDAQ:NVDA ) stock as their top pick ahead of the Consumer Electronics Show (CES) on January 6. Nvidia CEO Jensen Huang is set to deliver his keynote during the event.

“While the big themes have already been mentioned in the media ahead of the event, we still see CES as a positive catalyst, re-asserting NVDA’s platform dominance/opportunity in high-growth markets,” BofA analysts led by Vivek Arya said in the note.

Analysts are particularly interested in several potential updates from Nvidia at CES. These include the company's robotics strategy involving the Jetson Thor platform, the launch of the RTX 50xx, Blackwell variants for PC gaming cards, a possible venture into the AI PC market through a partnership or a standalone PC CPU, and updates on data center technology, including current and next-generation products.

Nvidia's projected 50%+ year-over-year sales growth in the calendar year 2025 could position it as the fastest grower in the S&P 500 index , BofA notes, citing current consensus estimates.

The firm also sees a potential continuation of over 20% sales growth into the following year, as Nvidia expands its reach into enterprise and sovereign deployments. Despite a trading price-earnings (PE) ratio above the S&P 500 average, BofA considers Nvidia's stock to be attractively priced, especially given its growth prospects.

“Historically NVDA stock has traded between 25x-35x forward PE range, and hence currently at 30x is attractively trading within the middle of its valuation range, in our opinion,” analysts said.

The push into robotics is seen as a significant move for Nvidia, leveraging its comprehensive capabilities from silicon to software. However, BofA acknowledges the challenges in creating reliable, affordable, and widespread robotics products that can generate credible business models.

“From that perspective robotics could remain another cool but niche opportunity such as metaverse or autonomous cars,” analysts wrote. “So, while we don’t doubt NVDA’s capabilities, we are unsure as to when and how fast they can influence NVDA’s financials.”

Lastly, analysts expect CES to provide reassuring updates on Nvidia's Blackwell shipments and the next-gen variants optimized for AI inference, as well as a potential accelerated timeline for the Rubin project. These updates are seen as crucial for Nvidia to address market concerns and company-specific issues that have affected its stock performance over the past six months.

Source: Investing.com