Citi reaffirms Nvidia stock buy rating, highlights AI focus

On Tuesday, Citi analysts reiterated their Buy rating and maintained a $180.00 price target for Nvidia stock (NASDAQ: NASDAQ:NVDA), which currently trades above its InvestingPro Fair Value. The analysts emphasized Nvidia’s strategic focus on artificial intelligence (AI) networking, highlighting the company’s efforts to optimize compute and storage with its networking operating system, Dynamo. This system is designed to achieve the lowest total cost of ownership for tokens per second per user. With a market capitalization of $3.35 trillion and an impressive financial health score of 4.51/5, Nvidia continues to dominate the semiconductor industry.

Nvidia’s recent first-quarter results showed a significant 64% quarter-over-quarter growth in its networking segment, reaching $5 billion. The growth was driven by both scale-up and scale-out products, contributing to the company’s remarkable 86.17% year-over-year revenue growth and industry-leading 70.11% gross profit margin. The company’s NVLink solutions achieved over $1 billion in sales, while its Spectrum-X (Ethernet) portfolio gained traction with two new customers, contributing to a quarterly run-rate of $2 billion. For deeper insights into Nvidia’s financial performance and access to 18 additional ProTips, visit InvestingPro.

The analysts noted that Ethernet is evolving as a preferred choice for hyperscalers due to its familiarity, while Infiniband remains the gold standard. Nvidia’s strong Spectrum-X capabilities position it well in the market, as it offers a comprehensive stack that includes super NICS, switches, and NVLink Fusion for semi-custom AI infrastructure. With an EBITDA of $88.25 billion and strong cash flows that easily cover interest payments, Nvidia maintains a solid financial foundation for continued innovation.

NVLink, a specialized scale-up platform, connects 72 GPUs via a cache-coherent interface, benefiting larger language models. Customers have the flexibility to purchase only the components they need for their AI infrastructure, such as super NICS and switches, without committing to the entire stack.

The analysts also discussed Co Packaged Optics (CPO) in relation to NVLink, noting that while copper is low power and cost-effective, it can create noise on the PCB. By placing optics next to ASICs, Nvidia aims to eliminate the need for additional digital signal processors and retimers, further optimizing its AI networking solutions.

In other recent news, NVIDIA has received attention from analysts with UBS reiterating a Buy rating and maintaining a $175 price target. This comes as NVIDIA’s recent earnings results and guidance met expectations, with positive commentary on gross margins and product shipments. UBS noted that NVIDIA’s progress in rack shipments and developments with new products were more promising than anticipated, despite concerns about supply chain inventory. Wolfe Research also maintained an Outperform rating on NVIDIA with a $170 price target, highlighting the company’s successful addressing of investor concerns related to rack production and AI technology diffusion.

Additionally, Tesla (NASDAQ:TSLA), along with other major tech companies known as the "Magnificent Seven," experienced a dip in premarket trading amid uncertainties surrounding global trade tensions and tariff policies. This group, which includes Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT), saw declines in stock value as geopolitical issues influenced market sentiment. The recent US-China trade tensions have further complicated the outlook for these companies, particularly affecting Tesla and other tech giants.

Meanwhile, Bank of America has forecasted significant growth in semiconductor sales, projecting a 13.4% increase in 2025, with expectations that sales could approach $1 trillion by 2030-2032. The upcoming Global Tech Conference will address these themes, along with the impact of US-China trade tensions on the semiconductor sector. AI infrastructure and related chip companies are highlighted as attractive investment opportunities, with major cloud providers’ capital expenditures expected to rise significantly.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.