Bank of America believes that the sharp increase in Nvidia's stock price recorded in 2023 is expected to continue this year, as the company continues to benefit from its success in developing and selling artificial intelligence chips.
The American bank said in a note that Nvidia's rapidly growing profits and revenues will allow it to achieve free cash flows worth $100 billion over the next two years.
The company achieved free cash flows of less than $30 billion over the past two years.
Bank of America analyst Vivek Ariya said the booming cash flows will help Nvidia embark on new growth initiatives that will significantly boost its valuation.
The memo explained that out of the expected $100 billion in cash flows, between $30 billion and $35 billion will be pumped into share repurchases, leaving about $65 billion to $70 billion for organic and inorganic growth operations.
The bank set a target price for Nvidia shares at $700, representing an increase of 42% from current levels.
