Analysts Says Nvidia's Stock Could Undergo Apple-Like Transformation With Focus On Software And Services
Portfolio Pulse from Benzinga Neuro
Analysts at Melius Research suggest that Nvidia (NASDAQ:NVDA) could experience an Apple-like transformation by focusing more on software and services. They note that Nvidia's software business, including the AI supercomputer DGX Cloud, is expected to generate significant revenue and provide long-term margin support. This shift could lead to a higher valuation for Nvidia's stock due to the premium typically assigned to software earnings. The company's strategic positioning in AI and partnerships with cloud service providers like Microsoft and Oracle are contributing to its growth and market leadership.
January 23, 2024 | 6:06 am
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Nvidia's focus on software and services, including its AI supercomputer DGX Cloud, is expected to generate substantial revenue and support margins. Analysts believe this could lead to a higher stock valuation due to the preference for software earnings.
The analysis suggests that Nvidia's shift towards software and services could result in a more stable and recurring revenue stream, which is highly valued by investors. This could lead to a multiple expansion for Nvidia's stock, similar to what has been observed with companies like Apple that have successfully transitioned to a software and services model. The expected revenue from the DGX Cloud and partnerships with major cloud service providers further support the potential for stock appreciation.
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