What was the situation?
Investors were mainly unimpressed with Nvidia‘s (NVDA -0.85 percent ) pronouncements as the company’s Graphics Technology Conference 2022 (GTC 2022) came to an end on Wednesday.
Don’t get me wrong: I’m a big believer in the power of positive thinking The announcements by Nvidia to improve its artificial intelligence products, build a supercomputer for advanced robotics, expand its virtual reality Omniverse, and so on were all amazing in and of itself. It’s only that they were widely predicted, and Wall Street investors had already “priced in” the stock, so they didn’t persuade them to change their price forecasts.
As of 11 a.m. ET, the stock of Nvidia had risen 5.8%.
So, what’s new? One of the reasons Wall Street decided not to boost its price targets on Nvidia was that the business “didn’t raise its guidance at all.” as I indicated in yesterday’s piece.
Nvidia, on the other hand, appears to have heard it loud and clear, because, according to MarketWatch, the company is now telling investors that it sees “a $1 trillion opportunity” in the several major areas of semiconductor growth that it is pursuing.
In terms of the total addressable market, Nvidia estimates that it is worth:
$300 billion in automotive chip sales; $300 billion more in other chip and system sales; $150 billion in artificial intelligence corporate software sales; $150 million in Omniverse enterprise software sales; and $100 billion in annual revenue from video gaming services like GeForce Now.
What do you get if you add it all up? Nvidia is looking at a $1 trillion market.
What are your options now?
Nvidia’s updated estimates were described as “very large numbers,” by an analyst at Evercore ISI, and another at investment bank Bernstein complimented the business for presenting a “clearer picture of the broader strategy” going forward. The market is finally “starting to get an inkling of what might be possible as we go down this road” toward a worldwide “Omniverse/Metaverse.” according to the Bernstein analyst.
Neither of these analysts raised their price targets for Nvidia as a result of today’s news. However, the clearer Nvidia’s route to $1 trillion in sales (at some time in the future) becomes, the faster I predict the stock to soar.