Nvidia's market value exceeds the sum of Intel, AMD, and Micron! Nvidia's valuation is on par with software vendors

As of the close of the U.S. stock market on the 16th local time, Nvidia's latest share price fell to $199.5, with a market value of $497.154 billion, exceeding the total of Intel, AMD, and Micron Technology. Analysts pointed out that Nvidia's various data are very similar to those of software companies, and software is the key to Nvidia's competitiveness.

Evercore ISI analyst CJ Muse recently released a report, raising Nvidia's target price from a split-adjusted $187.50 to $250, raising its rating to above the market, and raising its 2025 earnings per share forecast to $7.50 from $6.25, because of optimism about Nvidia's performance in the software field.

“We compared Nvidia’s competitiveness, growth metrics, and margins to software companies (rather than traditional semiconductor companies) – the similarities are striking, leading us to believe that comparing Nvidia to software companies is more accurate, thus supporting a higher P/E multiple,” the report states.

The report mentioned Nvidia's artificial intelligence enterprise platform in cooperation with VMware, its cooperation with Mercedes-Benz, the Omniverse simulation and collaboration platform, and the cloud gaming platform GeForce Now, all of which are considered to be driving factors for Nvidia in the software field. "The company's software investment is at a turning point, and software revenue will increase by more than $4 billion by 2025."

Citi Research analyst Atif Malik, who has a Buy rating on Nvidia with a $223 price target, also suggested that software is the reason for its above-average valuation. “The recovery of data center sales in the enterprise in the second half of the year and the increasing contribution of software-as-a-service sales in managing large-scale artificial intelligence workloads are 5% above the market consensus.”

UBS analyst Timothy Arcuri, who gave a more traditional earnings forecast and a buy rating, last week raised his price target on Nvidia to $250. He cited Nvidia's results and outlook as "steadily moving higher in the data center," leading to the higher estimates.

According to FactSet data, of the 41 analysts covering Nvidia, 34 gave buy ratings, 5 gave hold ratings, and 2 gave sell ratings, with an average target price of $204.21.

Nvidia is scheduled to hold a second quarter earnings conference call for fiscal year 2022 (ending August 1) after the U.S. stock market closes on Wednesday (18th). In last quarter's earnings report, CEO Huang Renxun said that demand for its data center GPUs is increasing, and analysts expect Nvidia's server chip sales to increase by more than 30% year-on-year to a record $2.27 billion.