BofA update shows where active managers are putting money
Investing.com -- Loop Capital raised its price target on NVIDIA Corporation (NASDAQ:NVDA) to $250 from $175, saying capital spending on chips that power generative AI systems is growing far faster than investors expect.
Analyst John Donovan said checks with cloud-service providers and other large technology buyers point to a surge in demand for graphics-processing units or GPUs and custom AI accelerators.
The firm estimates that spending on non-central-processing-unit compute, largely GPUs, could climb to about $2 trillion in 2028, or roughly 50% to 60% of total installed compute capacity, compared with about 15% today.
“The math just works,” Donovan wrote, adding that the projected investment could support a $6 trillion market value for Nvidia if the company meets the brokerage’s earnings forecast.
Nvidia shares were up about 1.2% at $149.30 in premarket trading.
Loop Capital said the ramp-up of Nvidia’s new Blackwell-generation chips, coupled with widening adoption of AI “factory” data centres by governments, start-ups and mid-size cloud providers, positions the chipmaker for another leg of demand after rapid growth in 2023 and 2024.
The firm now expects Nvidia to ship 6.5 million GPUs in calendar 2025 and 7.5 million in 2026 at average selling prices above $40,000 each.
It also sees an expanding market for AI inference, the running of machine-learning models – as reasoning-oriented software agents move into production.
Donovan cautioned that the new target assumes Nvidia continues to trade around 30 times forward earnings, in line with other large U.S. technology companies.
A lower multiple would imply that “price-earnings compression” could offset some of the forecast growth, he said.