In a rare event, Nvidia (NASDAQ:NVDA) shares plummeted nearly 7% during Wednesday’s trading session. The decline followed news that the White House is considering imposing additional regulatory measures against China’s chipmaking industry. Additionally, Donald Trump’s statement suggesting that Taiwan should pay the U.S. for protection has cast uncertainty over relations with the world’s largest chip exporter.
So, after surging 138% this year, are Nvidia shares poised for a significant correction? Not so fast, says Goldman Sachs’ Toshiya Hari, a 5-star analyst rated in the top 1% of the Street’s stock pros.
After hosting a group meeting with the chip giant’s chief financial officer, Colette Kress, the top analyst reaffirmed the company’s strong market position and future prospects.
“The meeting reinforced our belief in the sustainability of the ongoing Gen AI spending cycle as well as Nvidia’s ability to maintain its leadership position through consistent and rapid innovation across Compute, Networking and Software,” Hari noted.
A key takeaway from the meeting revolves around the upcoming launch of the Blackwell GPU platform, with Kress noting that compared to past generational transitions, key suppliers are “better-prepared” heading into the Blackwell ramp. Hari thinks Blackwell products will generate “limited revenue” in FY3Q (October), but driven mostly by the GB200 NVL36 (boasting 18 Grace CPUs and 36 Blackwell GPUs linked in a rack-scale design) and NVL72 (36 Grace CPUs and 72 Blackwell GPUs linked in a rack-scale design), a “more significant ramp” should follow in FY4Q (January) and FY1Q (April).
Given the significant increase in hyperscale capex over the last year and a half, and the “strong near-term outlook,” investors often question how long the current capex trend can last. While Hari anticipates this debate will persist due to the early stage of Gen AI (and the uncertainty surrounding its adoption rate), whilst recognizing Nvidia will eventually face a “cyclical correction,” a recent analysis by Hari’s colleagues comparing the ongoing Gen AI cycle to previous Compute build cycles offers some reassurance. For example, Microsoft’s current “capex efficiency” is similar to that of years 4-5 in the Cloud Computing cycle, and Azure AI revenue after five quarters is surpassing the trajectory Azure had six years after its launch.
To this end, Hari rates NVDA shares a Buy, backed by a $135 price target, which implies ~15% upside for the next year. (To watch Hari’s track record, click here)
The Street’s average is a bit higher; at $140.85, shares are expected to gain 19% over the 12-month timeframe. On the ratings front, based on 37 Buys vs. 4 Holds, NVDA stock claims a Strong Buy consensus rating. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
