Nvidia's stock price is expected to rise significantly due to its success in developing and selling AI chips. The company's strong competitive position and upcoming pipeline of new AI chips are also contributing factors. The bank estimates that of the $100 billion free cash flow, only $30 to $35 billion could be used for buybacks, leaving $65 to $70 billion for new organic and inorganic growth initiatives.
Key takeaways:
- Bank of America predicts Nvidia has a potential upside of 42% in 2024 due to its success in AI-chip development.
- Nvidia is expected to generate $100 billion in free cash flow over the next two years, which will be used to fuel new growth initiatives.
- The key to Nvidia's future growth is its ability to build a recurring revenue profile, reducing its dependency on hardware sales.
- Nvidia is considering more enhanced partnerships and acquisitions of software companies to help traditional enterprise customers deploy, monitor and analyze generative AI applications.