On Wednesday, Citi updated its stance on NVIDIA Corporation (NASDAQ:NVDA), raising the price target to $150 from the previous $126, while reiterating a Buy rating on the stock. The firm's decision follows an increase in their CY25/26 EPS forecasts by 7% and 13%, respectively, based on the anticipated growth in the production of the GB200 for NVL36/76 configurations.
The adjustment in the price target to $150 is anchored on a consistent 35x P/E multiple applied to the revised CY25 EPS estimates. The firm's analysis indicates that large cloud service providers, which accounted for mid-40s percentage of data center sales in the April quarter, are scaling up AI infrastructure, which has been a significant driver of demand for NVIDIA's offerings.
Citi notes the emergence of enterprise AI agents as a potential next wave in AI demand, particularly for inference, which currently represents about 40% of NVIDIA's data center sales. The firm provided insights into how AI agents function and introduced NVIDIA's RAG platform, which is designed to build such AI agents.
The firm's outlook on AI adoption is optimistic, suggesting that it is in the early to middle stages, or the "3rd/4th innings." This perspective underpins Citi's continued recommendation to Buy NVIDIA shares, as the firm anticipates further growth and adoption of AI technologies.
In other recent news, Nvidia, a leading player in the AI and semiconductor industry, has been at the center of significant market activity. The company's shares recently surged by 6.8%, marking its best performance in a month. This rebound contributed to a broader tech-led increase in U.S. and global equity markets. Despite this surge, Nvidia's shares experienced a significant decline over past trading sessions, resulting in nearly $5 billion in paper profits for short sellers betting against the company.
Furthermore, Cathie Wood's ARK ETFs sold a substantial number of Nvidia shares, indicating strategic adjustments to its portfolio. ARK's activity also included the purchase of additional shares in Roku (NASDAQ:ROKU) Inc and 10X Genomics Inc, reflecting confidence in these companies' growth prospects.
In corporate developments, potential acquisition interest from U.S. meal delivery company Doordash has put Deliveroo (OTC:DROOF)'s shares in focus. Meanwhile, the tech sector's performance, bolstered by Nvidia's share surge, has encouraged European markets to open higher.
In relation to index reshuffling, Nvidia, along with other AI-related stocks, is expected to heavily influence the FTSE Russell's annual reconstitution. The company's shares have soared approximately 180% since the last reconstitution, reflecting the robust rally experienced by AI stocks.
InvestingPro Insights
In light of Citi's positive outlook on NVIDIA Corporation (NASDAQ:NVDA), recent data from InvestingPro offers additional context for investors considering the stock. NVIDIA boasts a Piotroski Score of 9, indicating a very healthy financial situation, which aligns with Citi's assessment of the company's robust fundamentals. Additionally, analysts are expecting sales growth in the current year, which could be a driving force behind the company's sustained momentum.
From a valuation perspective, NVIDIA is trading at a high earnings multiple with a P/E ratio of 72.45, reflecting the high growth expectations embedded in the stock price. The company's strong position in the Semiconductors & Semiconductor Equipment industry is further evidenced by its impressive revenue growth of 208.27% over the last twelve months as of Q1 2025. Moreover, NVIDIA's liquid assets exceed short-term obligations, providing financial flexibility.
For those seeking deeper insights, there are additional InvestingPro Tips available at: https://www.investing.com/pro/NVDA, which could further inform investment decisions. Interested investors can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of investment knowledge and tips.
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