Nvidia Stock Is a Top Pick for November, According to 1 Wall Street Analyst

Source The Motley Fool

Nvidia (NASDAQ: NVDA) stock has been on a tear, and one Wall Street analyst sees plenty of reasons for that. Mizuho's Vijay Rakesh just named Nvidia the new top pick for November in the semiconductor sector.

According to reports, the analyst note contends that Nvidia's dominance in supplying chips to the growing number of companies building artificial intelligence (AI) models will only expand. With that market also growing quickly, Nvidia should benefit, and that justifies Nvidia's "outperform" rating from the analyst.

Nvidia stock is soaring

In one twist from the report, Mizuho still has a price target of $140 on Nvidia stock. After the stock has jumped more than 10% to new highs in the last week, and 18% over the past month, it has already surpassed that target level. The fast-growing AI chip sector could lead the analyst to boost that price target, however.

Rakesh estimates that Nvidia has greater than a 95% market share in a market expected to grow at a 74% annual growth rate for the next several years. In his research note in Barron's, he wrote: "We see AI server penetration growing to >10% by 2027 from ~1% in 2023 and Nvidia continuing to dominate with solid road map execution."

But it's not just chips for AI training and inference supporting Nvidia's growth. The analyst also sees continued opportunities for Nvidia beyond chips for AI data center servers. Nvidia's gaming segment is its second-largest revenue generator. Gaming chip sales have also been accelerating recently, growing more than 11% sequentially over the two most recent quarterly periods. Rakesh estimates that Nvidia has about 75% market share in gaming GPUs (graphics processing units).

While Nvidia shares have already passed the current Mizuho price target, the company is the clear leader in multiple fast-growing segments. Investors should expect volatility, but Nvidia stock still looks to be a long-term winner from recent levels.

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Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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