Nvidia has firmly established itself as a leader in the artificial intelligence (AI) semiconductor industry, resulting in a surge in its stock value this year. Citi analysts are optimistic about Nvidia’s future prospects, citing increased investment in data centers and the company’s competitive edge over its potential rivals.
The analysts at Citi have raised their target price for Nvidia (ticker: NVDA) to $520, up from $420, while maintaining a Buy rating. This revision is based on a projected price-to-earnings multiple of 35 times for the year 2025. They have even proposed a bullish case scenario with a target price of $600, assuming a price-to-earnings multiple of 40.
As of now, Nvidia shares have already tripled in value in 2023 and were up 0.7% in premarket trading, reaching $457.70.
The Citi analysts express confidence in Nvidia’s accelerated year-over-year growth in data center sales throughout the year. Despite potential risks like stricter U.S. export restrictions to China and competition in the future, they remain steadfast in their support for Nvidia.
While Nvidia currently dominates the AI chip market due to its expertise in graphics-processing units (GPUs), competitors like Advanced Micro Devices (AMD) are also vying for a share of the multibillion-dollar opportunity in chip supply. However, Citi believes that Nvidia’s strong position will persist due to its advantages in software optimization for GPU computations, an impressive networking portfolio, and superior hardware.
According to the Citi analysts, Nvidia is expected to maintain a significant lead over AMD in terms of AI performance and retain approximately 90% market share in the AI-related graphics-processing unit market for the next two to three years. In fact, they anticipate this market to reach a value of $150 billion by 2027.