Citi maintains Buy on NVIDIA stock with $163 price target

On Thursday, Citi analysts maintained a positive stance on NVIDIA Corporation (NASDAQ:NVDA), reiterating a Buy rating and a $163.00 price target. The affirmation follows NVIDIA’s reported sales for January and April quarters, which slightly exceeded Citi’s expectations. NVIDIA’s sales reached $39 billion and $43 billion for the respective quarters, surpassing Citi’s forecasted figures of $38 billion and $42.5 billion by 3% and 1%. This continues the company’s impressive growth trajectory, with InvestingPro data showing a remarkable revenue growth of 152.44% over the last twelve months, pushing NVIDIA’s market capitalization to $3.22 trillion.

The company’s Blackwell product sales hit $11 billion, outperforming Citi’s projection of $10 billion. This success indicates that Blackwell’s ramp-up is progressing smoothly, overcoming previous challenges. NVIDIA anticipates robust growth into 2025, fueled by increasing demand for inference tasks driven by complex reasoning models like DeepSeek. These models require significantly more computational power—up to 100 times more—compared to simpler one-shot inference operations.

Despite a gross margin outlook that fell short of expectations—170 basis points below Citi’s forecast and 80 basis points below the consensus—NVIDIA expects to achieve mid-70s percentage margins by the end of the fiscal year. The company has already demonstrated strong profitability with a current gross profit margin of 75.86%, according to InvestingPro data, which also reveals a perfect Piotroski Score of 9, indicating excellent financial strength. In response to this outlook, Citi has slightly adjusted its earnings per share (EPS) predictions for fiscal years 2026 and 2027, with a minor decrease of $0.01 for FY26 and an increase of $0.35 for FY27.

The report also acknowledged potential headwinds that could affect NVIDIA’s stock performance in the short term, including possible new trade restrictions with China, semiconductor tariffs, and gross margin concerns. However, Citi suggests that these factors may keep NVIDIA’s stock within a certain trading range for the time being.

Despite these challenges, Citi believes NVIDIA offers an appealing valuation for long-term investors. The stock is currently valued at 23 times the projected calendar year 2026 EPS, which Citi views as attractive. With a current P/E ratio of 50.63 and an overall financial health rating of "GREAT" from InvestingPro, which offers comprehensive analysis of 1,400+ US stocks through its Pro Research Reports, they recommend maintaining a Buy rating, seeing the current stock price as a favorable entry point for investors looking beyond the near-term uncertainties.

In other recent news, NVIDIA’s recent financial performance has been the subject of analysis from several investment firms. UBS has maintained a Buy rating on NVIDIA, with a price target of $185, citing the rapid progress of the Blackwell project and a strong demand for computing power in the AI sector. Despite slightly lower-than-expected gross margins due to a shift in product mix, UBS anticipates earnings per share to potentially reach $6-6.50 next year. Citi also reiterated a Buy rating, setting a price target of $163, and noted that NVIDIA’s sales have slightly exceeded their projections, with Blackwell sales surpassing expectations. However, Citi has adjusted future earnings estimates due to gross margin concerns. Wolfe Research has reaffirmed an Outperform rating with a price target of $180, highlighting NVIDIA’s sustainable performance without reliance on irregular revenue boosts. Meanwhile, Bernstein raised its price target to $185, maintaining an Outperform rating, and emphasized NVIDIA’s successful navigation of supply chain challenges and full production of the Blackwell line. In contrast, Summit Insights downgraded NVIDIA from Buy to Hold, citing a less favorable risk-reward balance and potential future challenges in the market dynamics.

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