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NVIDIA stock supported by GPU momentum and AI market leadership, per Citi

EditorEmilio Ghigini
Published 12/18/2024, 04:47 AM
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On Wednesday, Citi reaffirmed its positive stance on NVIDIA Corporation (NASDAQ:NVDA) stock, maintaining a Buy rating and a price target of $175.00. According to InvestingPro data, NVIDIA boasts a perfect Piotroski Score of 9, indicating exceptional financial strength, while maintaining impressive gross profit margins of 75.86%.

The endorsement comes amid discussions in the tech industry regarding the ongoing competition between general-purpose graphics processing units (GPUs) and custom application-specific integrated circuits (ASICs).

In their statement, Citi highlighted the advantage of NVIDIA's GPUs, particularly their software reprogrammability through CUDA, which allows them to adapt to various workloads. This flexibility is seen as a key differentiator in the face of strong results from custom ASIC chipmakers.

Citi's analysis projects a $380 billion total addressable market (TAM) for AI accelerators by the calendar year 2028, with AI GPUs anticipated to claim a dominant 75% market share, while ASICs are expected to take the remaining 25%. Despite a forecasted increase in the unit mix of ASICs to over 35% by 2028, the higher average selling prices (ASPs) of AI GPUs are likely to constrain the sales mix of AI ASICs to approximately 25%.

The firm also referenced recent supply chain discussions suggesting NVIDIA's allocation of cowos foundry capacity is set to increase to 60% in 2025, up from 56% in 2024. This anticipated growth underscores the continued momentum for NVIDIA's GPU products into the following year, supported by the company's remarkable revenue growth of 152.44% over the last twelve months.

Citi's reiteration of the Buy rating and the $175 price target reflects confidence in NVIDIA's market position and the ongoing relevance of its GPU technology in the rapidly expanding AI accelerator space. The broader analyst community shares this optimism, with InvestingPro showing price targets ranging from $130 to $220.

For deeper insights into NVIDIA's valuation and growth prospects, including 20+ additional ProTips and comprehensive analysis, explore the detailed Pro Research Report available on InvestingPro.

In other recent news, Nvidia has been experiencing a downward trend in stock value linked to comments made by Microsoft (NASDAQ:MSFT) regarding chip supply. Microsoft has indicated a lessening need for chip supply, contrasting with Nvidia's projection of high demand for their Blackwell chips into 2025.

Concurrently, Wolfe Research has maintained a positive stance on Nvidia, citing its robust position in artificial intelligence (AI). Truist Securities also showed optimism, upgrading Nvidia's price target due to its dominance in AI and potential launch of a client-side CPU in 2025.

Bernstein, too, reaffirmed their positive outlook on Nvidia, alongside Broadcom (NASDAQ:AVGO), in the semiconductor sector. These are the recent developments for Nvidia, as per various analyst notes and company statements.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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