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Investing.com -- Citi has lifted its price target on Nvidia (NASDAQ:NVDA) to $190 from $180, citing a larger-than-expected total addressable market (TAM) for AI data center semiconductors and higher projections for both compute and networking revenues.
The updated valuation is based on a consistent 30x price-to-earnings (P/E) multiple on Citi’s raised full-year 2028 (FY28) earnings per share (EPS) estimate of $6.37.
The Wall Street firm now expects the total 2028 AI data center semiconductor TAM to reach $563 billion, up 13% from its prior estimate of $500 billion. This increase is driven by stronger-than-expected sovereign demand and a larger opportunity in networking.
“We model total 2028 data center semis AI TAM to now reach $563B or 13% above our prior expectation of $500B,” Citi’s Atif Malik said in a note, adding that sovereign AI investments are already contributing “billions of dollars in 2025” and are expected to accelerate in 2026.
Networking TAM was revised to $119 billion from $90 billion, reflecting the demand for larger AI training clusters and “emerging scale-up intra-networking opportunities," he noted.
Citi expects networking to account for 21% of the AI data center TAM in 2028, up from its previous estimate of 18%.
Within Nvidia’s own data center business, networking sales were revised up by 12% for FY2027 and 27% for FY2028, now representing around 20% of total data center revenue.
The Blackwell platform rollout is progressing smoothly, and Citi believes that supply concerns are overblown. “Deployments are happening at a rapid pace,” Malik wrote, with the transition from Hopper to B200 offering a blueprint for a seamless move to GB300.
The analyst also continues to model gross margin expansion, expecting mid-70% levels by fiscal year-end.
“Nvidia’s confidence is based on what it has seen in terms of Blackwell ramp for GB200 and what it expects GB300 ramp to eventually be,” he said.
Alongside the TAM and sales revisions, Citi increased its FY2027 and FY2028 EPS estimates by 6% and 21%, respectively.
The note emphasized Nvidia’s strong positioning, stating the company is “involved in essentially every sovereign deal” and has “line of sight to 10s of GW over the next couple of years.”
Citi also pointed to some potential downside risks, including the possibility of new U.S. export restrictions.
While the impact of the China AI ban has already been priced in and broader diffusion rules are no longer expected, the Trump administration may introduce curbs on countries such as Malaysia and Thailand over concerns about indirect shipments to China.
Malik cautioned that this could present a modest risk, though he believes Nvidia is well equipped to monitor the movement of its GPUs.