Nvidia Stock Tops $750 Billion Market Cap. This Analyst Sees Giant Metaverse Opportunities.
Nvidia is the top holding of the Roundhill Ball Metaverse exchange-traded fund.
Justin Sullivan/Getty Images
Nvidia stock surged to a record in Thursday trading after analysts at Wells Fargo raised their price target by about 30%, saying the videogame- chip powerhouse was well positioned to help build the metaverse.
Shares of the leading maker of computer graphics processing units (ticker: NVDA), jumped 15% to $306.72. That left it poised to close the trading day with a market capitalization of more than $760 billion.
Earlier this week, Nvidia became the seventh-largest U.S. company by market cap, after overtaking Warren Buffett’s Berkshire Hathaway. The stock has gained more than 134% so far in 2021.
Analysts at Wells Fargo, who have an Overweight rating on Nvidia, raised their price target to $320 from $245. They wrote in a note Wednesday evening that the company is an “enabler/platform for the development of the Metaverse across a wide range of vertical apps.”
The analysts believe the metaverse, a potential version of the internet where users would interact seamlessly in always-online virtual worlds that enable commerce, communication, and entertainment, could create a $10 billion market opportunity for the company over the next five years. They say as many as 20 million designers and engineers could turn to an open platform for virtual collaboration that the company calls Nvidia Omniverse.
“We expect a near-term infection in Omniverse adoption in the enterprisesegment; specifically in design as real-time simulation boosts engineering productivity,” they wrote.
The metaverse evolved from an aspiration among tech enthusiasts, especially game developers, to a scorching hot investing trend after Facebook changed its corporate name to Meta Platforms with plans to update its “FB” ticker to “MVRS” on Dec. 1. CEO Mark Zuckerberg outlined the company’s plans to invest billions in building the metaverse, stressing that his company will be among many firms that collaborate and shape how users interact in the future.
The Wells Fargo analysts aren’t the first to identify Nvidia as a key player in the metaverse space. The $209 million Roundhill Ball Metaverse exchange-traded fund (META), which launched in June, includes Nvidia as its top holding at 9.2%. The ETF rose 1% to $15.75 in Thursday trading.
“Semiconductor companies like Nvidia are leveraging their GPU capabilities and serving data centers across the world, powering intensive, highly-parallel computing tasks,” Mario Stefanidis, Roundhill’s vice president of research, told Barron’s.
Stefanidis says Nvidia’s Omniverse, which is virtual reality compatible, allows users to collaborate in real time and create physically accurate simulations with realistic lighting.
“This type of infrastructure will be pivotal for the metaverse, as users seek immersive experiences that bridge the physical and virtual worlds,” Stefanidis said. “CEO Jensen Huang predicts that GPU performance will more than double every two years, and we have already reached a critical inflection point where these upgrades will fuel significant growth in the backbone of the metaverse.”
Write to Connor Smith at [email protected] and Joe Woelfel at [email protected]
