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Investing.com -- Citi lowered its price target for Nvidia (NASDAQ:NVDA) from $175 to $163 ahead of the company’s upcoming earnings report on February 26, while maintaining a Buy rating on the stock.
The firm cited concerns over mid-term AI diffusion restrictions and potential weakness in AI infrastructure spending as key factors behind the recent stock decline.
“We model in-line Jan/Apr-Q and believe expectations are for ~$38B/$42.5B sales for the Jan/Apr-Qs given supply chain indications for the Blackwell to ramp more meaningfully mid this year,” Citi wrote.
The analysts noted that investors remain focused on Nvidia’s earnings report and its annual GTC conference in March, where updates on Blackwell architecture and AI spending trends will be closely watched.
Nvidia shares have been range-bound since June last year, as declining gross margins due to product mix have weighed on investor sentiment.
“We expect the gross margins to trough in the Apr-Q,” Citi said. The firm also pointed out that China-related risks remain a factor, leading to a 7% reduction in its CY25/26 earnings per share (EPS) estimates.
Despite these adjustments, Citi remains optimistic about Nvidia’s long-term growth potential.
“We believe NVDA stock is approaching valuation support levels, trading at mid 20’s P/E & 25% discount to ASIC peer average,” the analysts wrote.
With AI demand still a major driver, Citi continues to view Nvidia as a long-term leader in the sector, though near-term uncertainties could keep the stock under pressure until clearer guidance emerges.