Citi maintains Buy on NVIDIA shares with $175 target

On Monday, Citi analysts, led by Atif Malik, confirmed their Buy rating on NVIDIA (NASDAQ:NVDA) shares with a price target of $175.00. The semiconductor giant has demonstrated exceptional performance, with revenue growth of over 150% in the last twelve months and maintaining impressive gross profit margins of nearly 76%. According to InvestingPro analysis, NVIDIA maintains a perfect Piotroski Score of 9, indicating strong financial health. The affirmation comes amid discussions about DeepSeek™s R1, a China-made large language model (LLM), which has drawn attention for its cost-efficient compute performance. Malik expressed skepticism about the claims of DeepSeek™s cost advantage, suggesting that advanced GPUs likely played a role in fine-tuning and building the underlying LLMs through the Distillation technique.

Despite the potential challenge to the dominance of US companies in advanced AI models, Citi analysts believe that US access to more sophisticated chips remains an advantage. They argue that leading AI companies are unlikely to shift away from advanced GPUs, which offer better value in terms of dollars per TFLOP at scale. InvestingPro data reveals NVIDIA's strong market position, with the company currently being valued above its Fair Value, reflecting high investor confidence in its growth prospects. InvestingPro subscribers have access to over 20 additional key insights about NVIDIA's financial health and market position.

The analysts also pointed to recent capital expenditure announcements, such as Stargate, as evidence of the ongoing demand for advanced chips. The Citi team's stance is that NVIDIA's position in the market is secure, supported by the industry's need for high-performance GPUs to drive the next generation of AI applications. The Buy rating suggests that Citi sees NVIDIA as a strong investment, with expectations for the company's continued growth and dominance in the AI chip market. This outlook is supported by NVIDIA's strong financial metrics, including a 133.75% return over the past year and robust cash flows that easily cover interest payments.

In other recent news, a significant joint venture in the artificial intelligence (AI) sector was recently announced, involving SoftBank (TYO:9984) Group Corp., OpenAI, and Oracle Corp (NYSE:ORCL). The venture, worth $100 billion, aims to fund AI infrastructure, with eventual plans to raise funding to at least $500 billion. In related news, ByteDance, the parent company of TikTok, plans to invest over $12 billion in AI infrastructure by 2025, according to the Financial Times.

Nvidia has reclaimed the title of the world's most valuable publicly-traded company, surpassing Apple (NASDAQ:AAPL) for the third time. The company's robust growth reflects the strong demand for Nvidia's AI chips. The chipmaker's revenue nearly doubled to $35.08 billion in the most recent quarter.

The U.S. government has imposed a new rule, "Export Control Framework for Artificial Intelligence Diffusion" (IFR), that will affect Nvidia's products. Compliance will be mandatory after a 120-day delay, starting May 15, 2025. Nvidia has expressed its commitment to U.S. leadership in innovation and its intent to provide feedback during the public comment period.

Nvidia continues to demand advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC), transitioning to a newer type of technology called CoWoS-L for its sophisticated AI chip, Blackwell. DA Davidson reaffirmed a Neutral rating on Nvidia, maintaining a price target of $135, indicating a cautious outlook on the company's ability to meet consensus expectations for the calendar year 2026 and beyond. Despite near-term challenges, KeyBanc maintains an Overweight rating on Nvidia.

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