- Constellation Research said Nvidia stock will soar 65% to $200 per share over the next year.
- The research firm said it expects Nvidia stock to continue soaring for the next 18 to 24 months as it benefits from its AI dominance.
- There are seven moats around Nvidia's business that will enable continued growth.
Nvidia stock will surge to $200 per share over the next 12 months, and its ongoing rally is set to last up to another two years, according to Constellation Research.
Constellation founder R "Ray" Wang told CNBC on Monday that he believes Nvidia has seven moats that will help it maintain its dominant position in the market for GPUs that are fueling the AI boom.
"Nvidia is the foundational stock in the Age of AI. CEO Jensen Huang intends to achieve vertically integrated domination from silicon to software through partnerships and direct routes to market. Unlike the PC age where Microsoft, Intel, and Cisco served as a triumvirate foundational players, this new era will have new players all tied back to Nvidia," Wang told Business Insider in an e-mail on Monday.
These are the seven reasons Wang expects Nvidia stock to soar 65% from current levels.
1. Visionary founder-led CEO
"It's a visionary-led CEO, and that's very very important as you've seen in the valley. Those are the ones that have led, like the Larry Ellisons of the world, the scott Mcnealys, the Mark Zuckerbergs," Wang said.
2. High barrier to entry
"There's few competitors that can come into this chip market, and it takes a long time to get a chip to market, and if you can do that and if you succeed and then if you can actually get the right chip, that's a very hard thing to do."
3. High switching costs
"Once you're in, you're locked in because of the CUDA software and all the access to the chips, the software, and the entire stack. You're going to be locked in for quite some time and they've got quite a lead in terms of doing that."
4. Dominant market share
"Nvidia has had dominant market share, and I think that makes a big difference because they've been in this market for quite some time and the competitors are behind by 24 months."
5. Strong product roadmap
"We're only seeing one-tenth, maybe one-one hundredth of the product roadmap that Nvidia has out there, and that's really exciting for those who actually have some insight into what they have next, because it's more than just chips, and it's more than just what's happening in software. That ability to go from silicon all the way to the end side, that's where we're going to see a lot of the innovation."
6. GPU is the default standard in AI
"The ecosystem has made the GPU a default standard. It's the standard everyone's looking to for AI from inference and testing."
7. The numbers don't lie
"We're seeing some amazing growth here that actually matches the P/E ratio, and that's what everyone is looking at, they're trying to figure out how this is going to continue, but gross margins are 78%, 262% growth compared to a year ago, this is going to continue for at least the next 18 to 24 months."
Wang said the current 14% decline in the stock since it peaked at about $140 per share last week represents yet another buying opportunity for investors.
"The pullback is coming at a macro level. People are worried about the consumer side, people worried about where the economy is going to head, and they're doing some profit-taking before the summer, so I think it's a good time to buy the dip," Wang said.
Wang isn't the only analyst on Wall Street with a $200 price target for Nvidia stock.
Last week, Rosenblatt raised its Nvidia price target to $200 per share on the prospect of the company better monetizing its CUDA software platform.