UBS maintains Nvidia stock rating at Buy, citing OpenAI deal potential

Investing.com - UBS has reiterated its Buy rating and $205.00 price target on Nvidia (NASDAQ:NVDA), highlighting the significant revenue potential from its partnership with OpenAI. The stock, currently trading near its 52-week high of $184.55, maintains a strong analyst consensus rating of 1.35 according to InvestingPro data.

The investment firm estimates the OpenAI deal could generate approximately $400 billion in revenue for Nvidia over multiple years, though the timing will largely depend on OpenAI’s implementation plans. This potential revenue boost would add to Nvidia’s already impressive performance, with the company reporting $165.22 billion in revenue over the last twelve months and achieving 71.55% revenue growth.

UBS believes this agreement helps validate Nvidia’s previously outlined growth trajectory toward a $3-4 trillion total addressable market by 2030, of which Nvidia has historically captured about 30-35% share.

The firm notes that the deal appears to be largely incremental to existing capacity allocations, though there might be some overlap with Oracle’s capacity already designated for OpenAI.

UBS suggests the partnership could potentially impact Broadcom’s ASIC revenue from OpenAI, while potentially creating more significant competitive challenges for AMD by reinforcing Nvidia’s dominant market position.

In other recent news, Nvidia announced a significant partnership with OpenAI, which has led to a series of analyst updates. The collaboration involves deploying at least 10 gigawatts of Nvidia systems for OpenAI’s future AI models. Following this announcement, DA Davidson reiterated its Buy rating on Nvidia with a price target of $210. Benchmark also maintained its Buy rating with a slightly higher price target of $220, emphasizing the strategic importance of the deal.

Bernstein SocGen Group echoed this sentiment, reiterating an Outperform rating and setting a price target of $225, suggesting a potential $100 billion investment by Nvidia in OpenAI over time. Rosenblatt Securities maintained its Buy rating and a price target of $215, highlighting the partnership’s potential to bolster OpenAI’s AI infrastructure. Evercore ISI raised its price target to $225 from $214, maintaining an Outperform rating, as they anticipate an increase in Nvidia’s total addressable market due to this partnership. These developments underscore the strategic importance of Nvidia’s collaboration with OpenAI in the AI sector.

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