NVIDIA Corporation soon to be acquired?
NVIDIA Corporation is set to dominate not just the next-generation chips for the gaming market, but also power the next major wave, or rather revolution, of technological innovation – artificial intelligence.
Yesterday’s NVDA stock price movement – 3% jump on no news – is, probably, indicative of it being seriously considered as an acquisition target. In my opinion, NVIDIA Corporation’s computer chips will power the next major wave of technological innovation, which later on will be called technological revolution. This is the advent of the artificial intelligence (AI) era. Changes it will bring about are mind-boggling.
Science fiction for almost a century has been mostly about AI. Computers moved it closer to becoming a reality, but there is one crucial element missing – capability for computers to actually learn from their “experience”. And only now that we have this crucial element in place – computer chips developed by NVIDIA Corporation. It is truly a struck of genius to recognize that graphic processing units of GPUs - those super powerful and versatile chips for gaming - combined with software could be made into self-learning units.
NVDA stock is a darling of investors. Its price increased four-fold last year and is up 43% year to date. How much higher can it go? Our valuation model set the fair value of the stock at $1,821 per share, which would put the company market capitalization at about $947 billion – an eleven-fold increase from the current market cap of $88 billion (at yesterday’s close of $148.01 per share).
Because of the enormous potential for company products, NVDA stock despite its recent share price rise is still grossly undervalued and, therefore, a prime acquisition target. The acquisition price is not likely to be less than $200 billion. There are not that many companies that are ready to shell out so much cash, and one name instantly comes to mind – Apple Inc. For AAPL the acquisition of NVIDIA not only makes a lot of sense (they need to do something with all that cash they are sitting on), but, in my opinion, it is an excellent opportunity to break out from the model of evolutionary development they seem to be settling in and once again become a great pioneer of the technology world.
Of course, at this point the above is just a speculation on my part. But I feel confident that interest in NVIDIA Corporation as an acquisition target is real and growing. The company’s stock price grows in tandem with it.