Raymond James lifts NVIDIA stock target to $165, maintains strong buy

On Thursday, Raymond (NSE:RYMD) James analyst Srini Pajjuri increased the price target on NVIDIA (NASDAQ:NVDA) shares to $165 from $150, while reiterating a Strong Buy rating. The semiconductor giant, now valued at $3.29 trillion, continues to demonstrate exceptional financial strength with a perfect Piotroski Score of 9, according to InvestingPro data. The adjustment follows NVIDIA’s first-quarter results and second-quarter outlook, which exceeded the analyst’s recent expectations. Pajjuri noted that this performance was particularly impressive given the larger-than-anticipated impact from H20 restrictions.

NVIDIA has successfully ramped up production of Blackwell racks, overcoming early yield issues, which has positively influenced the company’s gross margins, now standing at an impressive 75%. Additionally, management pointed to a significant rise in revenue-generating inference services, indicating that the monetization of artificial intelligence (AI) is gaining momentum. The company’s strong execution is reflected in its remarkable 114.2% year-over-year revenue growth.

The company’s networking segment saw a robust recovery after two quarters of decline, bolstered by NVLink, while the Spectrum-X Ethernet switch has secured two new customers, META (NASDAQ:META) and GCP. The gaming sector also showed robust performance, benefiting from new product releases and an improved supply chain.

Looking to the future, while NVIDIA’s management did not provide specific comments on the second half of the calendar year 2025, they did hint at visibility into projects that will require tens of gigawatts of NVIDIA AI infrastructure. Each gigawatt represents a potential ~$50 billion opportunity.

The analyst also highlighted that concerns regarding China and the H20 issue have been mitigated. Furthermore, management clarified that more than 99% of data center GPU revenue billed to Singapore was actually for U.S. customers, which alleviates worries about potential additional export controls. Based on these developments, Raymond James has raised its estimates for NVIDIA and increased the price target to reflect the company’s strong prospects.

In other recent news, NVIDIA Corporation reported impressive fiscal Q1 2025 earnings, surpassing expectations for both earnings per share and revenue. The company achieved an EPS of $0.96, exceeding the forecast of $0.93, and reported revenue of $44.1 billion, which was above the projected $43.31 billion. The data center segment was particularly strong, with a 73% year-on-year increase, contributing significantly to the overall revenue. NVIDIA also faced challenges with new export controls affecting its H20 GPUs designed for the China market, resulting in a $4.5 billion charge due to unsellable inventory. Despite this, the company continues to focus on expanding its AI infrastructure and enterprise solutions. Analysts from firms like Morgan Stanley (NYSE:MS) and Bank of America Securities have shown interest in NVIDIA’s future growth, particularly in AI applications. The company is preparing for modest sequential growth and expects Q2 revenue to be approximately $45 billion, with a focus on maintaining strong financial health amidst geopolitical challenges.

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