Why We're Boosting Our Nvidia Price Target

Both the S&P 500 and the Nasdaq Composite are up in early-market trading on Friday, reflecting better-than-expected earnings from Netflix NFLX and American Express AXP as well as another positive data point for iPhone sales, which is lifting our shares of Apple AAPL, Qualcomm QCOM and Universal Display OLED. The third leg to this positive start for the final day of trading this week is Bank of America lifting its EPS expectations for Nvidia NVDA as well as its price target.

Currently, AAPL and NVDA shares are the two largest holdings in the S&P 500, representing almost 14% of that benchmark and just over 19% of the Nasdaq Composite. Knowing those weightings explains most of the difference between why those two market indices are up, and the Dow, which lacks NVDA shares and has a far more modest exposure to Apple at 3.5%, is trailing behind.

Boosting Our Nvidia Price Target

On Thursday, we shared that coming off the robust earnings and guidance from Taiwan Semiconductor TSM we would need to revisit our NVDA price target. After much consideration and seeing 2H 2024 and 2025 EPS expectations move higher, we are boosting our NVDA price target to $175 from $155, keeping our One rating intact. While that increase is smaller than BofA’s price target bump to $195 from $165, we would rather revisit our NVDA price target again once we have any revised capital spending figures from Alphabet GOOGL, Amazon AMZN, Microsoft MSFT and Meta META, rather than make the mistake of being overly aggressive. The good news is that even with our more modest assumptions, we still have ample upside to keep our One rating on NVDA shares.

The reasons behind our decision also support the AI and data center business for Marvell MRVL but we aren’t going to boost our MRVL price target just yet. The reason is that we want to see the expected upturn for Marvell’s enterprise networking and carrier infrastructure business unfold before making that move. As we see those signs, and we expect we will as AI adoption ramps, we’ll revisit our MRVL target accordingly.

Lifting Our Trade Desk Price Target

Coming off Netflix’s earnings on Thursday night and comments about its growing advertising business model, we are also lifting our price target for Trade Desk TTD shares to $135 from $120. During the September quarter, Netflix’s advertising business accounted for over 50% of sign-ups and management sees subscriber scale in all of its advertising-supported companies hitting scale next year. The thinking is that should support continued advertising business model growth into 2026.

We see that and similar adoption across other streaming or “Connected TV” platforms driving digital advertising growth for companies like Trade Desk. Adding support for that thinking is MediaOcean’s 2H 2024 market report, which finds Connected TV and streaming not only the top priority in the ad industry but it’s also one of the largest areas for increased spending in the coming quarters.

Good Data for iPhone, but We See an Extend Upgrade Cycle

Data from CounterPoint Research finds sales for Apple’s newest iPhones were up 20% during their first weeks of availability. The findings also show consumers continue to shift to pricier models with sales of Pro and Pro Max models rising 44% compared with last year’s models. While favorable on multiple levels, we need to be careful when interpreting this data, primarily because three weeks may not signal a sustained trend. Continued follow-through in October and November data would show us that demand has legs beyond earlier adopters and the Apple faithful.

Our thinking continues to be that the iPhone upgrade cycle will be an extended one as Apple dribbles out incremental Apple Intelligence features over the coming quarters. As that happens, we are likely to see more consumers take advantage of rich trade-in offers for older devices. We’re positioned for that with holdings in AAPL as well as QCOM and OLED shares.

The next set of catalysts for those three positions will be quarterly results from the smartphone food chain of companies, including Skyworks SWKS, Qorvo QRVO and Qualcomm.

This follows confirming data in TSM’s September quarter revenue and guidance for the continued rebound in the smartphone market.

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At the time of publication, TheStreet Pro Portfolio was long AAPL, QCOM, OLED, NVDA, GOOGL, AMZN, MSFT, META, MRVL and TTD.