On Thursday, Itau BBA sustained its Outperform rating on NVIDIA (NASDAQ:NVDA) shares, with a steady price target of $164.00. The firm's analysis suggests confidence in the company's earnings per share (EPS) momentum, following the recent quarterly results and forward guidance.
The analyst from Itau BBA acknowledged NVIDIA's conservative guidance for the fourth fiscal quarter of 2025, indicating no current signs of a market downcycle as per the latest conference call and financial outcomes. However, there was a note of caution regarding the potential divergence of the model from capital expenditure-driven demand exercises.
Despite NVIDIA posting higher EPS, Itau BBA decided to maintain the price target at $164.00 per share. The firm adjusted the fair price-to-earnings (P/E) ratio to 27.5 times from the previous 30 times, reflecting a cautious stance on the possibility of a future downcycle.
The analyst underscored the importance of inference catching up with training for NVIDIA's long-term investment thesis and the next phases of growth. Itau BBA's maintained Outperform rating indicates the firm's continued positive outlook on NVIDIA's stock performance.
In other recent news, NVIDIA has reported record-breaking total revenue of $35.1 billion, surpassing expectations with a revenue outlook for the next quarter aligning with market forecasts at $37.5 billion. The company's Blackwell chips are expected to significantly contribute to revenue streams, with production shipments to ramp up in the fourth quarter.
Analyst firms, including William Blair, Rosenblatt Securities, Cantor Fitzgerald, and Benchmark, have maintained positive ratings on NVIDIA, with several raising their price targets due to the company's robust financial performance and the anticipated success of the Blackwell product line.
Despite potential short-term pressure on gross margins due to the initial ramp-up of the Blackwell product, margins are expected to rebound in the second half, returning to the mid-70% level. The high demand for Blackwell is expected to outstrip supply for several quarters due to supply limitations.
The company's CEO, Jensen Huang, has expressed confidence in the future of artificial intelligence, which is expected to drive the expansion of cluster sizes and support NVIDIA's market dominance.
These recent developments highlight NVIDIA's strong financial performance and strategic position within the rapidly expanding AI industry. The company's Blackwell production is reportedly ahead of schedule, with shipments expected to surpass previous forecasts. Analysts from various firms have updated their stances, reflecting the ongoing adjustments in market expectations based on their performance and industry developments.
InvestingPro Insights
NVIDIA's recent financial performance and market position align with Itau BBA's Outperform rating. According to InvestingPro data, NVIDIA boasts a market capitalization of $3.57 trillion, reflecting its dominant position in the semiconductor industry. The company's revenue growth is particularly noteworthy, with a staggering 194.69% increase over the last twelve months as of Q2 2025, demonstrating strong demand for its products.
InvestingPro Tips highlight NVIDIA's financial strength and market leadership. The company has maintained dividend payments for 13 consecutive years, indicating financial stability. Additionally, NVIDIA operates with a moderate level of debt, which is crucial for sustaining growth in the capital-intensive semiconductor industry.
Investors should note that while NVIDIA is trading at a high P/E ratio of 67.04, it also has a low PEG ratio of 0.16, suggesting that its current valuation may be justified by its growth prospects. This aligns with Itau BBA's positive outlook on the company's earnings momentum.
For readers interested in a more comprehensive analysis, InvestingPro offers 22 additional tips on NVIDIA, providing a deeper understanding of the company's financial health and market position.
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