Nvidia (NVDA) shares climbed on Tuesday after analysts issued bullish calls ahead of its earnings report. Indeed, Stifel raised its price target from $165 to $180 per share thanks to the robust overall spending on AI infrastructure and Nvidia’s dominant position in a market that will be worth over $100 billion by 2025. Truist Securities also increased its target from $148 to $167 per share and pointed to demand from sectors like robotics and AI software.
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The rally also followed news that Nebius Group is launching a GPU cluster in the U.S. that will use up to 35,000 Nvidia chips, which makes up about 4% of the Hopper chips that were expected to ship in the October period, according to Bloomberg.
Interestingly, though, KeyBanc took a more cautious view by lowering Nvidia’s January quarter estimates due to weaker demand in China and the potential cannibalization of Hopper chips by the new Blackwell series. Nevertheless, despite trimming its sales outlook to $37.7 billion, KeyBanc still maintained an Overweight rating with a $180 price target.
Sam Altman Looking to Challenge Nvidia
In a separate development, Sam Altman, CEO of Microsoft-backed (MSFT) OpenAI, is reportedly seeking $150 million in funding for Rain AI, which is a semiconductor startup looking to challenge Nvidia (NVDA) in the AI chip market. According to the New York Post, Rain AI is being valued at $600 million during this round compared to the $25 million valuation it got during its initial round in 2022, where Altman was a key investor.
Rain AI focuses on energy-efficient and high-performance semiconductors and claims that its chips are 85% more energy-efficient than Nvidia’s. Although Rain AI is not an immediate threat to Nvidia, Wedbush analyst Dan Ives sees it as a serious player in the growing AI chip space and called it part of the early wave of the AI revolution. Therefore, it would be wise for Nvidia to not get complacent and continue to take every potential threat seriously if it wants to remain the leader.
Is NVDA Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 39 Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 191% rally in its share price over the past year, the average NVDA price target of $165.18 per share implies more than 12% upside potential.
