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On Thursday, BofA Securities analyst Vivek Arya increased the price target for NVIDIA stock (NASDAQ:NVDA) to $180 from the previous target of $160, while reiterating a Buy rating on the shares. The adjustment follows NVIDIA’s first-quarter earnings call, during which the company addressed several key issues. The semiconductor giant, now valued at $3.29 trillion, has demonstrated exceptional financial health with a perfect Piotroski Score of 9, according to InvestingPro data.
Arya highlighted three major takeaways from the call: Firstly, concerns regarding China have been mitigated with the inclusion of $15 billion in first-half sales of the H20 product in the financial model. Secondly, NVIDIA’s Blackwell racks are now in full production, with large hyperscalers ramping up to approximately 1,000 racks per week, which translates to around 13,000 racks per quarter or an estimated $30 billion+ in quarterly revenue at a rack average selling price (ASP) of more than $2.5 million. This ambitious production target aligns with NVIDIA’s impressive 114.2% revenue growth over the last twelve months. While NVIDIA did not provide further quantification, the analyst inferred that the top few hyperscalers could represent over $100 billion in revenue.
Thirdly, NVIDIA has expressed confidence in its gross margin (GM) recovery back to the mid-70s percentage range later in the year, indicating improving demand and execution at rack-scale. This target appears achievable given the company’s current robust gross margin of 74.99%, as reported by InvestingPro. Additionally, networking returned to a low to mid-double-digit percentage of Data Center revenue in the first quarter. NVIDIA’s comprehensive portfolio, including NVLink, Quantum/Spectrum, and BlueField technologies, is now fully ramping across multiple hyperscalers. This includes a new win with Google/Meta for the Spectrum-X, which Arya sees as an incremental headwind for Broadcom (NASDAQ:AVGO).
In light of these developments, Arya has raised the forecasted pro forma earnings per share (pf-EPS) for NVIDIA for fiscal years 2026, 2027, and 2028 by 6%, 2%, and 12% to $4.21, $5.87, and $7.23, respectively. The price objective has been increased to $180 from $160, based on a higher price-to-earnings (PE) multiple of 30 times, up from 28 times, due to the anticipated faster EPS growth. Currently trading at a P/E ratio of 46.09, NVIDIA’s valuation reflects its market leadership position. For a comprehensive analysis of NVIDIA’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, NVIDIA’s earnings report revealed stronger-than-expected revenue, despite challenges in the Chinese market due to the absence of H20 sales. DA Davidson raised its price target for NVIDIA to $135, maintaining a Neutral rating, while highlighting the importance of Chinese sales to the company’s overall revenue. Wells Fargo (NYSE:WFC) analysts maintained an Overweight rating with a $185 price target, projecting approximately $45 billion in revenue for the second quarter of fiscal year 2026, slightly above previous estimates. Melius Research increased its price target to $205, reaffirming a Buy rating, citing strong demand for NVIDIA’s new products and potential for sustained growth.
Morgan Stanley (NYSE:MS) also raised its price target to $170, maintaining an Overweight rating, and adjusted revenue projections for the October quarter and fiscal years 2026 and 2027. The firm’s analyst noted improved gross margins and strong customer demand for NVIDIA’s technologies. Stifel analysts maintained a Buy rating with a $180 price target, noting that NVIDIA’s first-quarter performance exceeded expectations despite a $2.5 billion revenue shortfall related to the H20 product line. They highlighted optimistic second-quarter revenue guidance and anticipated growth in non-China Data Center revenue.
These developments reflect a generally positive outlook among analysts, with expectations of continued demand and growth for NVIDIA’s products, despite geopolitical challenges.
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