Shares of Nvidia Corp. NVDA, +4.96% are up 2.8% in Thursday morning trading after Jefferies analyst Mark Lipacis boosted his price target on the stock to $854 from $740. The new target is the highest listed on FactSet. Lipacis is more upbeat about Nvidia’s prospects following a recent conversation with the company’s chief financial officer, Colette Kress, which highlighted the potential for software licensing in the data center. “While software is mostly embedded within hardware sales today, enterprise AI software in the data center can potentially be licensed similarly to how VMware licenses its system software,” Lipacis wrote. He noted that Kress said that it was possible for the company to break out software sales as a revenue line item once it becomes a meaningful portion of the business. Lipacis also relayed Nvidia’s expectation that its Arm acquisition will close in the early part of 2022. “Nvidia plans to help ARM build its model beyond just mobile by bringing ARM to the data center, automotive and IoT [Internet of Things] markets,” he wrote. “These progressions for ARM are viewed as not something ARM can do as effectively as a stand-alone company.” Nvidia shares have gained 37% over the past three months as the S&P 500 SPX, -0.07% has risen 6%.
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