BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
On Wednesday, Wells Fargo (NYSE:WFC) analyst Aaron Rakers maintained an Overweight rating on NVIDIA Corporation (NASDAQ:NVDA) with a steady price target of $185.00. The semiconductor giant, with its impressive $3.28 trillion market capitalization and perfect Piotroski Score of 9 according to InvestingPro, continues to demonstrate strong financial health with revenue reaching $130.5 billion, marking a remarkable 114.2% growth. Rakers highlighted the potential of NVIDIA’s NVLink technology, particularly following the recent announcement of NVLink Fusion. This new development allows third-party custom silicon and CPUs to integrate NVIDIA’s memory coherent NVLink for chip-to-chip interconnect, known as NVLink C2C.
Earlier in the week, NVIDIA announced NVLink Fusion, which is seen as an extension of the company’s NVLink technology into the custom AI ASIC market. The move is anticipated to bolster growth in NVIDIA’s Networking segment by enhancing scale-up capabilities. Despite some industry reports suggesting CPU connectivity is not a novel feature, Rakers emphasized the foundational role of NVLink interconnect in AI infrastructure.
NVIDIA’s NVLink interconnect is reputed for its significant bandwidth advantages compared to the industry standard PCIe connectivity. For instance, NVLink version 5 boasts a bandwidth of 1.8TB/s, which is more than 14 times the bandwidth of PCIe Gen5. The upcoming NVLink version 6, expected in the second half of 2026, is projected to double the bandwidth to 3.6TB/s with the integration of Rubin R200 GPUs.
Rakers also noted NVIDIA’s strategic move to externalize NVLink by enabling its Grace and Vera CPUs to connect with custom accelerators and CPUs, increasing the company’s competitive edge. Initial partners for this venture include Marvell (NASDAQ:MRVL), Alchip, MediaTek, and Astera Labs, with Synopsys (NASDAQ:SNPS) and Cadence providing IP blocks and design services. Additionally, Fujitsu and Qualcomm (NASDAQ:QCOM) are initial partners for custom CPU integration.
The NVLink Chiplet will be sold by NVIDIA for CPU-to-custom ASIC connections, while NVLink functionality is inherent in NVIDIA GPUs for GPU-to-custom CPU topologies. This strategic expansion of NVLink’s capabilities is expected to further cement NVIDIA’s position in the market for AI infrastructure technology. Based on InvestingPro analysis, NVIDIA’s current valuation metrics suggest the stock is trading above its Fair Value, though the company maintains strong fundamentals with a gross profit margin of 75% and minimal debt-to-equity ratio of 0.13. For deeper insights into NVIDIA’s valuation and 18 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, NVIDIA Corporation has been in the spotlight following its CEO’s keynote at Computex 2025, where several new technologies were unveiled. Among the announcements were NVLink Fusion and RTX PRO 6000 Blackwell servers, which are expected to broaden NVIDIA’s ecosystem and enterprise solutions. Analysts from Citi and Morgan Stanley (NYSE:MS) have maintained positive outlooks on NVIDIA, with Citi reaffirming a Buy rating and Morgan Stanley keeping an Overweight rating, both with price targets of $150 and $160, respectively. Meanwhile, BofA Securities also reiterated a Buy rating, maintaining a $160 price target, highlighting NVIDIA’s expanding AI product portfolio and its strategic moves in the enterprise sector.
In a related development, CoreWeave Inc. received a ’B+’ issuer credit rating from S&P Global Ratings, reflecting a stable outlook due to its rapid growth in AI infrastructure. CoreWeave’s strategic relationship with NVIDIA has been pivotal in securing substantial contracts, although the company faces potential risks from supplier and customer concentration. CoreWeave’s significant revenue backlog of $25.9 billion as of March 2025 indicates strong future growth prospects, despite potential liquidity challenges. The company is actively addressing internal control weaknesses and aims to sustain its competitive edge in the AI infrastructure market.
Additionally, NVIDIA’s strategic initiatives include a partnership with Foxconn (SS:601138) and the Taiwan government to build a new GPU supercomputer, with TSMC as the lead customer. This move is part of NVIDIA’s efforts to bolster its international presence. In contrast, the company faces challenges such as a $5 billion revenue headwind due to U.S. export restrictions on certain products to China. Nonetheless, analysts from Morgan Stanley and BofA Securities anticipate a strong performance for NVIDIA in the latter half of the year, driven by its innovative advancements and strategic partnerships.
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