U.S. may expand Nvidia and AMD’s 15% China chips deal to other companies
On Thursday, KeyBanc Capital Markets increased its price target on NVIDIA (NASDAQ:NVDA) shares from $180.00 to $190.00 while maintaining an Overweight rating. The adjustment comes as the firm anticipates NVIDIA to report robust fourth-quarter results that are expected to exceed expectations, as well as provide a conservative yet slightly higher first-quarter guidance compared to the consensus. According to InvestingPro data, NVIDIA boasts a perfect Piotroski Score of 9 and impressive gross profit margins of 75.86%, with the company set to report earnings in 6 days on February 26.
KeyBanc analysts noted NVIDIA’s challenges with manufacturing constraints for its GB200 NVL server racks but expect the impact to be more than compensated by several factors. Customers have reportedly been substituting orders for the GB200 with HGX-based B200 servers, which have x86 head nodes, due to lower initial yields for the GB200 NVL. Additionally, a surge in demand for NVIDIA’s H20 GPUs from China’s cloud service providers (CSPs) has been driven by limited supply of Huawei’s Ascend AI ASIC and the introduction of DeepSeek. This robust demand has contributed to NVIDIA’s remarkable revenue growth of 152.44% over the last twelve months, as reported by InvestingPro.
The analysts also highlighted that NVIDIA’s customers, especially CSPs, are financing inventory at Electronic Manufacturing Services (EMS) providers. This arrangement allows NVIDIA to recognize sell-in shipments to EMS as revenue. This financial strategy, along with the demand dynamics, has led KeyBanc to raise its estimates and price target for NVIDIA.
KeyBanc’s positive outlook is underpinned by the belief that NVIDIA’s strong performance will address any concerns that the emergence of DeepSeek might impact near-term AI capital expenditure intensity. The firm’s analysis suggests that despite the shipment limitations of GB200 NVL server racks, NVIDIA’s overall business strength will continue to support its market position and financial growth. InvestingPro analysis shows NVIDIA maintains a "GREAT" overall financial health score, with over 18 additional ProTips available to subscribers in the comprehensive Pro Research Report, offering deeper insights into this semiconductor giant’s $3.41 trillion market value story.
In other recent news, NVIDIA is projected to surpass revenue expectations despite ongoing supply chain challenges. HSBC analyst Frank Lee has adjusted NVIDIA’s stock price target from $185 to $175, while maintaining a Buy rating. Lee anticipates NVIDIA will achieve revenues of approximately $5 billion and $10 billion for the fourth quarter of FY25 and the first quarter of FY26, respectively, exceeding consensus estimates. Meanwhile, DeepSeek, a Chinese AI startup, is considering raising external funding due to increased demand for its AI chatbot app. The startup is exploring options to secure more Nvidia AI chips and is in discussions with investors, including Alibaba (NYSE:BABA) Group and Chinese state-affiliated funds.
In South Korea, the government plans to secure 10,000 high-performance GPUs this year to enhance its AI capabilities. This initiative is part of a broader strategy to establish a national AI computing center. Figure AI Inc. is in advanced talks to raise $1.5 billion, potentially valuing the company at $39.5 billion. The funding round is expected to be led by Align (NASDAQ:ALGN) Ventures and Parkway Venture Capital.
Additionally, Dell Technologies (NYSE:DELL) is in advanced negotiations to supply AI-optimized servers to Elon Musk’s xAI, with the deal estimated at over $5 billion. The servers, equipped with Nvidia GB200 semiconductors, are slated for delivery this year.
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