Equities

Fast Food Stocks Up 40%, Nvidia & Dell's AI Surge

Analysts bullish on Nvidia with an 11% upside, Jack in the Box seen surging 40%, and Dell's AI server sales drive stock high.

By Bill Bullington

5/16, 05:54 EDT
Dell Technologies Inc.
NVIDIA Corporation
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Key Takeaway

  • Nvidia's shares could rise 11% with strong demand for its Blackwell GPU series, as analysts predict revenues surpassing expectations by $1.5 to $2 billion.
  • Jack in the Box has over 40% upside potential, driven by new market performance and digital innovation, despite a 34% decline this year.
  • Dell's stock hits an all-time high with a projected $10 billion AI server revenue by 2025, leveraging Nvidia's AI chips amidst rising data center power demand.

Analyst Optimism for Nvidia

Wall Street analysts are expressing bullish sentiments ahead of Nvidia's first-quarter earnings report, anticipated after the market closes next Wednesday. Piper Sandler's Harsh Kumar maintains an overweight rating on Nvidia, with a price target of $1,050, suggesting an 11% potential upside. Kumar's optimism is rooted in the expected strong demand for Nvidia's new Blackwell GPU series across its data center customer base. He predicts the possibility of total revenues surpassing current expectations by $1.5 to $2 billion. Citi's Atif Malik and New Street Research's Pierre Ferragu also share positive outlooks, highlighting Nvidia's growth opportunities in AI and maintaining their buy ratings with price targets of $1,030 and $1,100, respectively. Nvidia shares have seen a significant increase, rising more than 91% this year.

Jack in the Box's Potential Upside

RBC Capital Markets has assumed coverage of Jack in the Box with an outperform rating, seeing over 40% upside potential for the stock. Analyst Logan Reich cites new market performance, digital innovation, and attractive valuation as key drivers for the optimistic outlook. Despite a 34% decline in its shares this year, RBC's price target of $75 indicates a robust recovery is expected over the next 12 months.

Dell's AI Server Sales Surge

Dell Technologies witnessed a 9% surge in its stock price, reaching an all-time high, driven by Morgan Stanley's upgraded price target of $152 from $128. The upgrade is based on Dell's potential $10 billion AI server revenue by 2025, leveraging Nvidia's advanced AI chips. This optimism is further supported by anticipated demand for AI-equipped PCs, with Microsoft set to introduce new AI features. Despite a recent slump in PC sales, the integration of AI technologies is expected to rejuvenate the market.

AI's Environmental and Infrastructure Challenges

The increasing adoption of AI technologies is projected to significantly raise data center power demand by 160% by 2030, according to Goldman Sachs Research. This surge underscores the urgent need for substantial investments in infrastructure and renewable energy to accommodate the growing electricity requirements of AI operations. The United States and Europe face considerable financial challenges in upgrading power grids and expanding renewable energy sources to mitigate the environmental impact of heightened carbon emissions from data centers.

Street Views

  • Harsh Kumar, Piper Sandler (Bullish on Nvidia):

    "We continue to see strong demand for NVDA’s data center products and feel the company is set up for another beat and raise quarter... NVDA remains our top large-cap pick and we remain bullish that the Blackwell series will provide meaningful acceleration to revenues longer-term."

  • Atif Malik, Citi (Bullish on Nvidia):

    "Likes the buy-rated stock on 'secular AI growth opportunities'."

  • Pierre Ferragu, New Street Research (Bullish on Nvidia):

    "High bandwidth memory sales growing by more than 50% in 2025 likely implies that AI chip revenues will also double, fueling his Nvidia thesis."

  • Logan Reich, RBC Capital Markets (Bullish on Jack in the Box):

    "New markets continue to perform well supporting [long-term] unit growth; new menu items & digital innovation should drive an [same-store sales] inflection in 2H24 into 2025 and valuation looks attractive at 22% below its 5-year average."