Nvidia’s Next-Gen GPU Chip Set to Revolutionize AI Advancements
A Watershed Moment for Investors
Nvidia is on the cusp of launching its highly anticipated Blackwell GPU chip, which promises to catapult the company to unprecedented heights. According to Melius Research, selling Nvidia stock now would be a grave mistake, akin to abandoning Apple after the release of its groundbreaking iPhone.
Valuation Perspective: Nvidia Stands Out
Despite its meteoric rise, Nvidia’s stock remains attractive from a valuation perspective when compared to its peers. Melius Research emphasizes that the company’s next-generation GPU will be a game-changer, driving significant upside in 2025 and beyond.
Price Target Boost: 26% Upside Potential
Ben Reitzes, a managing director at Melius, has bumped up his Nvidia price target to $185, representing a potential 26% increase from current levels. Reitzes believes Nvidia is approaching its Apple iPhone moment, where the company’s innovative products will drive exponential growth.
The Hopper and Blackwell Effect
Nvidia’s Hopper and upcoming Blackwell GPU chips are revolutionizing artificial intelligence advancements, powering everything from AI chatbots like ChatGPT to text-to-video and self-driving cars. These innovations have propelled Nvidia’s stock to unprecedented heights, with a market capitalization of over $3.5 trillion.
Big Profits Ahead
According to Melius Research, big clouds, sovereigns, and large enterprises are poised to invest heavily in this “once-in-a-lifetime opportunity.” As a result, Nvidia’s investors can expect substantial profits, with estimates suggesting the company could earn more than $5 per share in profits by 2027.
Gross Margins to Snap Back
Reitzes is increasingly optimistic that gross margins will rebound firmly into the mid-70s by mid-FY26, driven by the success of Blackwell and subsequent Rubin chips. This could lead to a significant upside in Nvidia’s stock price.
Attractive Valuation
Even with a decelerating growth rate, Nvidia’s CY2025 PEG ratio stands at about 0.8x, significantly lower than Broadcom’s and the lowest in the Mag 7 by a wide margin. This makes Nvidia’s stock an attractive investment opportunity for those looking to capitalize on the AI revolution.
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