HSBC maintains Buy on NVIDIA stock, unchanged $175 target

Published 19/03/2025, 15:38
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On Wednesday, HSBC analyst Frank Lee confirmed a Buy rating on NVIDIA (NASDAQ:NVDA) shares, with a steady price target of $175.00. The semiconductor giant, which boasts a perfect Piotroski Score of 9 according to InvestingPro data, has demonstrated remarkable strength with revenue growth of 114% in the last twelve months. This analysis joins a strong consensus among analysts, with 24 recent upward earnings revisions for the upcoming period. Lee’s commentary followed the latest updates from NVIDIA’s GPU Technology Conference (GTC), where the company unveiled its long-term AI GPU roadmap without significant surprises. As a prominent player in the Semiconductors & Semiconductor Equipment industry, NVIDIA maintains strong financial health with a current ratio of 4.44 and operates with a moderate debt level, as revealed by InvestingPro’s comprehensive analysis of over 100 financial metrics. The transition to the Blackwell Ultra (GB300) in the second half of 2025 was anticipated, as was the launch of the Vera Rubin platform, expected to feature HBM4 memory and a CPO spec upgrade.

Lee noted that the Vera Rubin NVL 144’s reliance on 144 GPU dies, maintaining the same 72 GPUs per NVL rack as the previous Blackwell NVL 72, suggests that GPU content growth may be limited, with only additional memory and CPO content providing a relative advantage. The analyst also mentioned future platforms, including Rubin Ultra 576 and the Feynman GPU platform, planned for the second half of 2027 and 2028, respectively, which might be too distant for the market to currently value.

Addressing the Blackwell transition, NVIDIA CEO Jensen Huang discussed the expected shipment of 3.6 million Blackwell GPU units in 2025 to four major cloud service providers (CSPs)—Amazon (NASDAQ:AMZN), Azure, Google (NASDAQ:GOOGL), and Oracle (NYSE:ORCL). Lee expressed confidence in his forecast of approximately 4.2 million total Blackwell shipments for 2025, driven largely by demand from hyperscalers. However, he also pointed out that NVIDIA has not provided sufficient clarity on near-term Blackwell transitions to alleviate market concerns regarding supply chain ramp-up and CSP capital expenditure sustainability, which are expected to drive AI GPU demand in FY26.

Looking beyond data centers, NVIDIA highlighted potential growth areas in automotive and robotics AI markets. The company showcased GR00T N1, a customizable model for humanoid reasoning and skills, and announced a collaboration with General Motors (NYSE:GM) on next-generation vehicles. With an impressive EBITDA of $83.32 billion and robust gross profit margins of 75%, NVIDIA demonstrates strong financial capability to fund these expansion initiatives. While Lee sees these sectors as significant potential markets for AI, he believes it is too early to determine their timing and scale for market recognition.

Lee’s price target of $175 is based on a target FY26e PE of 34x applied to his FY26 EPS estimate of $5.12, which is 12% above the consensus of $4.59. The target implies approximately a 52% upside from current levels, supporting the Buy rating. Currently trading at a P/E ratio of 39.5x, NVIDIA shows strong fundamentals with a return on equity of 119% and return on invested capital of 98%. Lee also outlined key risks, including a slower-than-expected shift to higher ASP AI GPUs, reduced investment in generative AI by cloud service providers, weaker overall data center momentum, and geopolitical uncertainties. For deeper insights into NVIDIA’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro.

In other recent news, NVIDIA Corporation has made significant announcements at the GPU Technology Conference (GTC), including the introduction of the Blackwell Ultra (GB300) NVL72, anticipated to outperform its predecessor by 1.5 times, and the Vera Rubin NVL144, expected to deliver 3.3 times the performance of the GB300 NVL72. These developments are part of NVIDIA’s continued efforts to maintain its leadership in AI technology. KeyBanc Capital Markets has reiterated an Overweight rating for NVIDIA with a $190 price target, citing these strategic advancements. Additionally, NVIDIA unveiled the Isaac GR00T N1 foundation model, aimed at advancing the humanoid robot market, which is projected to reach nearly $4 billion by 2028. Stifel analysts maintained their Buy rating with a $180 price target, highlighting NVIDIA’s introduction of the Dynamo software, Quantum-X, and Spectrum-X switches, which are designed to enhance AI capabilities. Cantor Fitzgerald also maintained a Neutral rating with a $200 price target, noting the company’s focus on extreme computing for large-scale AI inference. NVIDIA’s roadmap for future product generations promises significant performance enhancements, positioning the company to capitalize on the projected growth in data center expenditures.

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