Nvidia shares may rise in the next 12 months, S&P Global analyst says

• Nvidia stock’s rally still has 12-18 months to go, according to S&P Global’s Andrew Chang.

• The stock has at least another year of “strong run” amid strong demand for its chips, Chang said.

• He expressed concern about a pullback in AI investment in the coming quarters, which could hurt the stock.

Nvidia stock has a lot more room to climb — and shares of the market’s most popular chipmaker are sure to rise for at least another year, according to Andrew Chang, chief technology officer at S&P Global Ratings.

The banking veteran pointed to Jensen Huang’s recent comments that sparked a spike in NVDA shares this week after he spoke at a Goldman Sachs conference in San Francisco. Nvidia’s CEO issued more guidance on consumer demand, and in particular, demand for Blackwell, the company’s next-generation GPU.

His comments support expectations for Nvidia’s continued upside, Chang said in an interview with Schwab Network on Friday.

“This just confirms our view that we have a strong runway for at least the next 12 months,” Chang said.

Nvidia’s partners are also showing signs of strong demand for the chips. Oracle, which has an ongoing partnership with Nvidia, raised its revenue forecast after beating first-quarter earnings. The software firm also doubled its planned capital spending for the fiscal year — all of which are bullish signs for Nvidia.

“This is all great data that, at least for the next 12 to 18 months, things look great,” Chang said of the Jensen Huang-led firm.

Still, he acknowledged some concerns that investors have voiced. Some have expressed concern that Nvidia’s growth is unsustainable, given that the stock behemoth has gained 2,514% over the past five years.

Some analysts have warned that demand for Nvidia’s chips may not remain strong in the coming years, as the company’s biggest customers may eventually turn to competitors. Apple and Microsoft, two huge customers of Nvidia GPUs, are working on their own AI chips.

“Ultimately, if Oracle, if Microsoft, if Amazon doesn’t see the return on investment they expect, they’re going to cut orders. So hyperscale, demand volatility is something we’re really concerned about,” Chang said. “But, you know, these data center players have been known to order a bunch and then take a break for a few quarters. That’s what we’re looking for.”

Investors will also need to be wary of tighter regulation of AI. Nvidia was recently targeted by the Justice Department in a new antitrust probe, Bloomberg reported, and it’s only a “matter of time” before other countries follow suit and try to regulate the technology, Chang said.

The story continues

Nvidia shares sold off in the weeks following its late August earnings report, but the stock staged another rally this week alongside other tech stalwarts including Oracle and Super Micro Computer.

Wall Street remains generally bullish on Nvidia. Analysts issued an average price target of $153 per share, implying a 29% upside from current levels, according to Nasdaq data.

Read the original article on Business Insider