Nvidia shares moved higher in mid-day Monday trading, extending their impressive autumn gains, following a bullish note on the tech giant's near-term outlook from a pair of top Wall Street analysts.
Nvidia (NVDA) , which has added around $780 billion in market value since early September, overtook Microsoft (MSFT) as the world's second-most valuable company last week, as investors continue to price in the value of its hammerlock on the global market for AI chips and processors amid a multibillion-dollar investment boom.
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Its closest rival, Advanced Micro Devices (AMD) , told investors last week that the market for AI accelerators, the chips that power large-language models used by hyperscalers such as Microsoft, Alphabet (GOOGL) and Meta Platforms (META) , could reach $500 billion within three years, a 25% increase from its prior forecast.
Last year, the very same market was pegged at around $45 billion.
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Nvidia's role in the current market ramp and the impact that tech investments are having on the broader economy are equally compelling: Estimates suggest that at the current projected rate, Nvidia will capture around 14% of marketwide capital spending by 2026.
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Citigroup analyst Atif Malik, who reiterated his $150 price target and buy rating on Nvidia shares in a note published Monday, sees the group capturing a huge share of the billions of spending already committed by U.S. cloud providers.
Nvidia: Blackwell output yield improved
"Nvidia remains the leader in hyperscaler AI accelerator installed base, holding a 67% share of the aggregate AI accelerator installed base at the four largest US hyperscalers (2021-2024E)," Malik and his team wrote. "Nvidia benefits from its chip performance lead, strong scaling capabilities, and large installed base, which supports enterprises with multicloud strategies."
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Malik says Nvidia could see the launch of its new Blackwell platform, as well as its legacy Hopper chips, pushing a 118% gain in graphics-processing-unit sales this year, with a further 84% gain in 2025.
That would represent around 31% of all capital spending from U.S. cloud providers this year and around 35% the following year.
"We forecast that both GPUs and ASICs will coexist in the push to build [artificial intelligence/machine learning] infrastructure. ASICs will be used for specialized models and differentiated cloud AI offerings, while GPUs will handle training and inference of larger, more complex models."
"Given the continued strong demand for Nvidia products and AMD’s upward revision of its AI [total addressable market] to $500 billion by 2028, we now expect a $380 billion AI accelerator [total addressable market] by 2028, with AI GPUs accounting for ~75%."
Goldman Sachs weighs in on NVDA
Goldman Sachs analyst Toshiya Hari, meanwhile, cited Nvidia's likely benefit from the increasing complexity of AI workloads, which the group outlined in an updated investor deck last week. Hari lifted his price target by $15 to $150 a share in a note published Monday.
Related: Analyst revamps Nvidia stock price target after investor meetings
Nvidia argues that the increasing sophistication of AI reasoning will drive an increase in computing requirements as hyperscalers build out their massive datasets.
"Training compute scales exponentially with larger models, multimodality, reinforcement learning and synthetic data generation," Nvidia said in a presentation last week.
"Inference compute scales exponentially with larger models, multimodality, large context, low latency and now long 'thinking time,'" the presentation added.
Nvidia's near-term outlook was also given support from Taiwan Semiconductor, the world's biggest contract chipmaker and a key player in the group's supply chain, when it reported third-quarter-sales figures last week.
TSM said sales for the three months ended in September were up 36.5% from a year earlier at around $23.3 billion. The group will report a detailed quarterly statement, as well as a fresh full-year outlook, later this week.
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Nvidia, for its part, told investors in late August that it saw current-quarter revenue in the region of $32.5 billion. The estimate came even as it faced some delays in shipping its new line of Blackwell processors, which stemmed from design changes and supply-chain snarls.
Finance chief Colette Kress said Blackwell should generate "several billion" in revenue for Nvidia's fiscal fourth quarter, which ends in January. She added that legacy Hopper sales would accelerate over the second half of the year.
Nvidia shares were marked 2.5% higher in mid-day Monday trading to change hands at $138.22 each, giving the stock a market value of $3.39 trillion. Apple was last seen 1.25% higher at $230.39 each with a market value of $3.5 trillion.
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