Despite cloud computing giants making huge investments in Nvidia's current-generation AI processors, demand for Nvidia's next-generation processors is "exceedingly robust," a Wall Street analyst said Monday. Nvidia stock rose on the news.
Supply chain checks by investment bank UBS point to demand momentum for Nvidia's Blackwell rack-scale systems. The checks could ease some investor concern about a possible pause in purchasing by hyperscale cloud companies in the transition between Nvidia's current Hopper series products and its upcoming Blackwell series products.
"The order pipeline for (Nvidia's) NVL72/36 systems is materially larger than just two months ago as hyperscaler budgets for calendar 2025 firm up," UBS analyst Timothy Arcuri said in a client note.
The Nvidia GB200 NVL72 server system connects 72 Blackwell graphics processing units and 36 Grace central processing units in a rack-scale design. Nvidia announced its Blackwell series products in March and they are forecast to begin shipping later this quarter.
Microsoft likely will be the largest buyer of the NVL72 systems initially, Arcuri said.
Nvidia Stock Is On Four IBD Lists
Arcuri reiterated his buy rating on Nvidia stock and raised his price target to 150 from 120.
On the stock market today, Nvidia stock climbed 1.9% to close at 128.20.
Nvidia stock has faced a "wall of worry" after retreating from record highs in late June, Arcuri said. But sentiment in the stock is still strong and the pullback could be "ultimately healthy" if the sales outlook materializes, he said.
Arcuri increased his sales and earnings estimates for Nvidia in calendar 2025 above Wall Street's consensus estimates. He now sees Nvidia earnings of $4.95 a share on sales of $204 billion next year, vs. sell-side estimates of $3.62 in earnings per share on sales of $161 billion.
Demand for the Blackwell series products is driven in part by their enhanced power efficiency against a backdrop of bottlenecks in power generation infrastructure, Arcuri said.
Nvidia stock is on four IBD lists: IBD 50, Leaderboard, Sector Leaders and Tech Leaders.
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