‘Most attractive name in our space:’ Barclays hikes Nvidia target to $240

Investing.com -- Barclays raised its price target on Nvidia to $240 from $200, citing accelerating demand for artificial intelligence infrastructure and the chipmaker’s leading position in the buildout.

The brokerage reiterated its Overweight rating, calling Nvidia “the most attractive name in our space.”

Analyst Tom O’Malley said the scale of AI investment has expanded rapidly over the past year, with more than $2 trillion of planned spending at around 40 gigawatts of power now identified.

Roughly 65-70% of that is earmarked for compute and networking, an area Barclays expects to flow heavily into Nvidia’s results over the next five years.

“With the wave of announcements that have come over the last 6-9mo, we now estimate over $2T of planned spend at ~40GW of power in total,” O’Malley said.

“Within that, we attribute ~65-70% to compute & networking with more deals likely in the pipeline, which starts to make the updated guidance of $3-4T look much more real,” he added.

Based on its updated model, Barclays now projects Nvidia’s adjusted earnings per share (EPS) to rise from $3 in fiscal 2025 to $6.93 by fiscal 2027 (FY27), implying a 53% jump year-on-year.

The bank’s new target of $240 is set at 35x its 2026 earnings estimate. O’Malley noted that the target would equate to 30x an implied EPS of about $7.85 if $35 billion in revenue from the recent OpenAI deal were included.

Nvidia said Monday it will commit as much as $100 billion to OpenAI and provide the ChatGPT maker with data center chips, formalizing a major partnership in the race to expand AI infrastructure.

The two companies signed a letter of intent covering at least 10 gigawatts of Nvidia systems, with final terms expected to be agreed in the coming weeks.

O’Malley stressed how Nvidia remains central to the AI ecosystem despite the emergence of custom silicon and competing accelerators. Barclays’ AI tracker points to 19 million GPUs tied to announced projects, with hyperscalers such as Amazon, Microsoft, Google, Oracle and Meta driving much of the demand.

The analyst also highlighted that usage growth in AI applications, including a 482% jump in ChatGPT message volumes in June.

“We see this largely flowing into the NVDA P&L (profit and loss) over the next 5+ years, moving numbers materially higher,” O’Malley continued.

Barclays set an upside case of $300 per share, assuming a larger AI market, stronger networking demand and higher margins.

The downside case is $140, reflecting risks such as weaker AI spending, a slower auto ramp and pricing pressure.