NVIDIA Corporation (NASDAQ:NVDA) Projected To Become First $500 Billion Semiconductor Company

NVIDIA Corporation (NASDAQ:NVDA) is projected to become the first $500 billion semiconductor stock as its data center business continues to rally. This is according to analysts from Bank of America, who studied the company’s recent earnings.

The analysts, led by Vivek Arya, have since increased Nvidia’s price target from $520 to $600, representing a 24% climb in its stock price. In addition, the analysts have reiterated their “buy” rating for the company’s stock and commended the company for robust financial results.

Nvidia reports better than projected results

Nvidia recently released its quarterly results for the second quarter of 2020 and surpassed prior projections. In addition, the results highlighted the growing importance of the company’s data center business after sales from the segment outweighed those from gaming products for the first time in the company’s history.

A close look at the company’s earnings report reveals evidence of major shifts in its business model. Although semiconductor design remains Nvidia’s core business, it also grows its software segment as it seeks to diversify its portfolio. Sales from Nvidia’s software portfolio have been rising steadily in recent quarters. According to the company’s strategy, it is meant to broaden its profit margins and offer more reliable revenue channels in the long run.

Nvidia’s half-trillion-dollar valuation

The analysts have projected that the company will soon be valued at $500 billion. Nvidia reported a 38% free cash flow, which is the best in the tech industry. In addition, the upcoming launch of the Ampere gaming chips has set the company into strong momentum. Based on these results, the analysts have raised the company’s profit forecasts for 2020, 2021, and 2022 by 10%, 14%, and 11%. During the quarter, Nvidia’s overall revenue rose by 26% to $3.866 billion. The company’s net income for the quarter amounted to $622 million. The revenue trends point to the magnitude at which the pandemic has impacted the company’s business. There has been significant growth in gaming revenue. The company’s initial boom in professional visualization, driven by the COVID-19 pandemic, has dried up.

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