Nvidia (NVDA) stock rose more than 4% on Tuesday following bullish remarks from Wall Street analysts who pointed to strong demand for chips ahead of its earnings report scheduled Wednesday afternoon.
In a client note this week, Stifel analyst Robin Roy raised his price target on Nvidia to $180 from $165, while William Stein of Truist Securities raised his price forecast to $167 from $148.
Roy cited a “variety of data points,” including continued high AI infrastructure spending by hyperscalers and demand for Nvidia’s latest Blackwell AI chips.
“We believe NVDA is well positioned in markets that combine to produce a total TAM (total addressable market, or revenue opportunity) of more than $100 billion by 2025 and a long-term opportunity trajectory that could approach $1 trillion,” Roy wrote.
Nvidia stock also rose on news that one of its customers, cloud services provider Nebius Group (NBIS), is launching its first GPU cluster in the US, which will… Use up to 35,000 Nvidia chips. A GPU cluster is a network of graphics processing units, or AI chips, with massive computational power used to train and run AI programs.
For reference, Nvidia’s 35,000-chip Nebius order is equivalent to about 4% of the volume of Hopper AI chips that Wall Street analysts expect Nvidia to ship in the October period, according to Bloomberg consensus data.
Nvidia declined to comment on the deal.
Nvidia’s stock rise comes a day after shares fell due to a report from Information about overheating issues with its Blackwell AI servers. Nvidia was reportedly in August Dealing with design flaws related to the individual Blackwell chips themselves, prompting the company to postpone chip production to the January quarter.
Nvidia has not confirmed any overheating issues with its Blackwell servers, and the company told Yahoo Finance on Monday, “Engineering iterations are normal and expected.”
“Conversations with our industry contacts do not precisely confirm this latest data point, but rather reflect supply chain challenges around the production ramp,” Truist Securities’ Stein said of the frenetic issues reported this week.
Despite the reported Blackwell issues, Dell Technologies (DELL) said it has already shipped its latest AI hardware product, the PowerEdge system, with Nvidia’s latest GB200 NVL72 systems.
“(C)Commentary from NVDA, partners, and our industry contacts appears very positive,” Stein wrote in a note to investors. He pointed to emerging demand for Nvidia chips in the “traditional” robotics and computing sectors, as well as demand from artificial intelligence software developers.
KeyBanc analysts took a more cautious view on Nvidia ahead of earnings, lowering their forecasts for Nvidia’s earnings and revenue for the January quarter, citing pressure on demand in China for Nvidia’s H20 chips.
“We believe demand for H20 in China has been pushed too far as there is increasing pressure among China’s hyperscalers to use local AI solutions,” they wrote in a note on Tuesday.
They also expressed concerns that Nvidia’s latest Blackwell chips could cannibalize Nvidia’s previous generation Hopper chips. “With respect to the H200, we have heard that some demand has been held back due to the availability of the Blackwell (B200).”
KeyBanc cut Nvidia’s fiscal fourth-quarter sales guidance to $37.7 billion from $40 billion and its earnings forecast to $0.83 per share from previous guidance of $0.88 per share. However, KeyBanc maintained an Overweight rating on the stock and a $180 price target.
Overall, analysts see Nvidia’s adjusted quarterly earnings rising 85% year-over-year to $0.74 per share, and revenue rising nearly 84% to $33.2 billion, according to Bloomberg estimates. About 90% of Wall Street analysts tracked by Bloomberg recommend buying the stock.
Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.
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