Market Optimism Defies Tariff Concerns
Despite President Trump’s recent comments on potential tariff hikes, futures are on the rise, with Nvidia (NVDA) stock trending sideways amidst investor uncertainty. The chipmaker’s shares have fluctuated in response to news about supply and demand for its current-generation Blackwell series products.
Wall Street Analysts Remain Bullish
According to FactSet, 61 analysts have buy ratings on Nvidia stock, while five have hold ratings, and none have a sell rating. This optimism is fueled by the company’s prospects this year, particularly in the artificial intelligence (AI) market.
AI Demand Insights Ahead
Investors will gain valuable insights into AI data center demand from upcoming Big Tech earnings reports. Meta Platforms (META), Microsoft (MSFT), Apple (AAPL), and Google parent Alphabet (GOOGL) are set to report their quarterly results in the coming weeks. Nvidia’s next earnings report is due on February 26.
Potential Catalysts and Challenges
The company’s GTC conference, starting March 18, could be a potential catalyst for Nvidia stock. However, the chipmaker faces challenges from changes in U.S. policy under President Trump, who has threatened to impose steep tariffs on imports that could impact Nvidia’s products. Additionally, increased competition from custom AI chips from Broadcom (AVGO) and Marvell Technology (MRVL) may pose a threat.
AI Chip Market Growth
Barclays analyst Tom O’Malley predicts that the AI chip market will continue to grow, with Nvidia GPU sales reaching nearly $100 billion in calendar 2024 and expected to grow to about $160 billion in calendar 2025. Custom silicon is expected to grow at a faster compounded rate over the next three years, reaching 55% of the total addressable market (TAM) by 2026.
Customers Seek Second-Source Options
Customers are looking for “second-source options” for AI computing systems, including merchant GPUs from Advanced Micro Devices (AMD) and custom chips from Broadcom and Marvell. O’Malley predicts that the custom ASIC portion of the inference accelerator market will reach 45% of total spending in the segment by 2028, up from 7% currently.
Analysts’ Outlook
O’Malley reiterated his overweight rating on Nvidia stock and upped his price target to 175 from 160. Evercore ISI analyst Mark Lipacis maintained his outperform rating on Nvidia stock with a price target of 190. D.A. Davidson analyst Gil Luria remains neutral on Nvidia stock with a price target of 135.
Nvidia Stock Performance
In 2024, Nvidia stock rose 171% to end the year at 134.29. Despite investor fears around production snags and slowing demand for prior-generation Hopper systems, analysts believe these concerns are overdone.
Leave a Reply