Will NVIDIA Corporation (NVDA) Stock Continue To Surge Higher In 2017?

VR gaming market opportunity may drive NVDA stock much higher.

– After a couple of recent analyst upgrades, NVDA stock has also been added by Goldman Sach to its ‘Conviction Buy List’.

– The VR gaming market could be a next big growth catalyst for NVIDIA Corporation (NASDAQ:NVDA) Corporation.

– After a monstrous 219% gain in 2016, can NVDA stock gain anything close to this figure in 2017?

The shares of NVIDIA Corporation (NASDAQ:NVDA) (1) have gone through the roof in 2016, yesterday again NVDA stock was up by almost 3.5%. It closed yesterday’s trading session at $105.17, up by a humongous 219% from its price of $32.96 at the beginning of the year. The flurry of analyst upgrades and price target hikes indicate the stock still has huge upside potential. Goldman Sachs’s Toshiya Hari was the latest to reiterate a buy rating on NVDA stock after Evercore ISI and Loop Capital recently upgraded their NVDA price targets. With so much bullish euphoria around NVDA stock, how close can it get to its 2016 performance in 2017 is the big question. Which new catalysts will keep propelling NVDA stock, and how will these recent analyst upgrades pan out? Let’s take a closer look.

VR Gaming Market – The Next Big Growth Driver

Goldman Sachs mentioned gaming and VR as some of the big trends for Nvidia’s rating upgrade. With Nvidia gaining more GPU market share steadily, it could be in for more impressive gains due to a rapidly growing virtual reality video gaming market. The virtual reality video gaming hardware market is expected to generate approximately $5 billion in revenue in 2016, which is significantly up from $660 million in 2015. Already Nvidia is a market leader in the gaming segment, but with this new massive opportunity ahead it could push its top line further higher by capturing this market.

The VR gaming hardware market will grow to $8.9 billion in 2017 and $12.3 billion in 2018, and NVDA is well placed in this segment with its new offerings here. Nvidia’s offerings have been a huge hit among the gaming community: with its Quadro M5500 GPU, it will offer the gamers a superior virtual gaming experience by allowing them to launch virtual reality workstations though its PC partners. This GPU is based on Nvidia’s Maxwell 2 architecture and is powered by 8 GB of GDDR5 RAM. Nvidia is of the opinion that the M5500 GPU is the fastest GPU in its segment.

Also Read: NVDA Stock: The Next Billion Dollar Opportunity For NVIDIA Corporation

AR/VR is a fast growing multi-billion dollar market, estimated to generate $120B revenue by 2020, and VR gaming is a major part of it. NVIDIA Corporation (NASDAQ:NVDA)’s revenue from VR GPUs could be as much as $8 billion in 2018, much higher than Nvidia’s overall gaming revenue in the past four quarters of $3.5 billion. If Nvidia takes its gaming dominance into the VR gaming space it can substantially grow its top line from just this market alone. The VR market opportunity is really massive and the potential of this market gives you more reasons to be bullish about NVDA stock. Given Nvidia’s gaming segment track record, one need not be surprised if this becomes the new growth catalyst for Nvidia, driving NVDA stock much higher than expected in 2017.

Weighing Up Analyst Upgrades

Goldman Sachs was the latest investment house to join the bullish NVDA bandwagon. This comes after Evercore and Loop capital recently upgraded NVDA stock from a hold to ‘buy’ rating and set price targets of $120 and $109. Goldman Sach’s analyst Toshiya Hari considers Nvidia as a “unique growth story in semis”. They have raised the price target on NVDA stock to $129 from $92. It has been one of the highest price targets set, with an upside of more than 22% from its last traded price on December 21.

As for valuation, Barrons reported:

Hari thinks the stock can “easily grow into” a P/E of 30 times the January 2018 earnings estimate.

The trends in gaming, virtual reality, and machine learning, as well as automotive electronics, were behind Goldman Sachs’ rating upgrade. With analyst upgrades coming in droves for NVDA stock, it is a clear indication that there is a huge upside potential left. The ever increasing price targets like this one also highlight that a repeat of the 2016 performance may be difficult but NVDA stock looks set to deliver even in 2017. The price targets will keep increasing as more positive data comes out on how well Nvidia executes its plans in order to realize all the opportunities ahead of it. (See Also: Advanced Micro (NASDAQ:AMD) Devices, Inc: Is AMD Stock Set To Skyrocket After Ryzen Release?)

Fellow Amigobulls author Virendra throws light on whether fundamentals back the bullish stance on Nvidia stock even at its all-time highs in his recent article.

Putting It All Together

With NVIDIA Corporation (NASDAQ:NVDA) making deep inroads into the AI and automotive segment also, it is faced with a couple of multi-billion dollar opportunities and seems to be making all the right moves to tap the same. The opportunity in VR is mammoth. With also its closest competitor Advanced Micro Devices, Inc. (NASDAQ:AMD) (2) still far-off in gaming GPU market share, it is looking to capitalize on this with some exciting new products. Add the spurt of analyst upgrades to the revenue potential in the VR gaming space, this is really a great time to be bullish on NVDA stock. Given the multi-billion dollar revenue opportunities, Nvidia’s business growth may go to another level and so will its stock in 2017. As an investor, it is best to stay invested in NVDA stock and pounce on any pullbacks to buy more.

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The article Will NVIDIA Corporation (NVDA) Stock Continue To Surge Higher In 2017? originally appeared on amigobulls.com. Watch our analysis video on NVDA

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