On Monday, Citi reaffirmed its confidence in NVIDIA (NASDAQ:NVDA), maintaining a Buy rating and a $150.00 price target for the stock.
The firm's analysis suggests a bright future for NVIDIA's GPU sales, anticipating significant year-over-year growth in both 2024 and 2025. NVIDIA's GPUs are expected to play a critical role in the development of artificial intelligence (AI) and machine learning (ML) infrastructure, complementing the use of custom Application-Specific Integrated Circuits (ASICs).
According to Citi's projections, NVIDIA's GPU compute sales could surge by 118% in 2024 and 84% in 2025. Sales to hyperscalers are also forecasted to increase by 100% in 2024 and 67% in 2025. This growth is expected to account for 31% of U.S. cloud provider capital expenditures in 2024, marking a 9% increase over 2023, and is anticipated to rise to 35% by 2025. On the other hand, custom ASICs are also predicted to grow, representing 8% of U.S. cloud provider capex in 2024, with sales ramping up by more than 200% before stabilizing to a 16% year-over-year growth in 2025.
The demand for NVIDIA's products remains robust, as evidenced by various AI accelerator projects and AMD (NASDAQ:AMD)'s revised AI Total Addressable Market (TAM) estimate, which increased from $400 billion to $500 billion by 2028. Citi now expects the AI accelerator TAM to reach $380 billion by 2028, with AI GPUs comprising approximately 75% of this market.
NVIDIA is regarded as a dominant force among hyperscalers, holding an estimated 67% share of the four largest U.S. hyperscalers' AI accelerator installed base from 2021 to 2024, which amounts to roughly 6.3 million units. Citi attributes NVIDIA's market leadership to three main advantages: a performance lead at the chip level, superior scaling capabilities, and a large installed base across major cloud providers. This widespread presence is crucial for enterprises employing multi-cloud strategies, as it ensures the necessary interoperability across different cloud infrastructures.
In other recent news, Citi reaffirmed their Buy rating on NVIDIA Corporation (NASDAQ:NVDA), anticipating strong year-over-year growth in cloud data center capital expenditures. They also highlighted NVIDIA's strategic advantage as the industry moves towards system-level scaling.
InvestingPro Insights
NVIDIA's strong market position, as highlighted in Citi's analysis, is further supported by recent data from InvestingPro. The company's financial metrics underscore its impressive growth trajectory and market dominance in the AI and GPU space.
InvestingPro data reveals that NVIDIA's revenue growth has been nothing short of extraordinary, with a 194.69% increase over the last twelve months as of Q2 2025. This aligns perfectly with Citi's projections of substantial GPU sales growth in the coming years. The company's gross profit margin stands at a robust 75.98%, reflecting its ability to maintain high profitability despite rapid expansion.
An InvestingPro Tip indicates that NVIDIA has a perfect Piotroski Score of 9, suggesting strong financial health and operational efficiency. This score supports Citi's confidence in the company's future performance and its ability to capitalize on the growing AI accelerator market.
Another relevant InvestingPro Tip notes that NVIDIA is a prominent player in the Semiconductors & Semiconductor Equipment industry, which reinforces its position as a leader in GPU technology for AI and ML applications.
For investors seeking a deeper understanding of NVIDIA's potential, InvestingPro offers 20 additional tips that could provide valuable insights into the company's future prospects.
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