Nvidia Stock Gains. Why This Analyst Sees a Further 70% Rise Ahead.

Nvidia chips are the favored choice for training artificial-intelligence models. (Joel Saget/AFP via Getty Images)

Key Points

• Nvidia’s shares rose Monday, adding to a 51% gain this year, driven by AI chip spending.
• Technology companies like Google and Microsoft project nearly $405 billion in capital expenditures this year, much for AI data centers.
• U.S. restrictions on advanced chip sales to China continue, potentially costing Nvidia $2 billion to $5 billion quarterly in lost sales.

Nvidia stock was rising on Monday. Investors are still optimistic about spending on artificial-intelligence chips, despite restrictions on sales of processors to China.

The chip maker’s shares were up 2.2% at $206.91 in early trading. Coming into Monday trading, the stock has risen 51% this year.

The latest positive for Nvidia and other companies exposed to the AI trend has been earnings reports from technology companies. Alphabet’s Google, Microsoft, Meta Platforms, and Amazon.com signaled they expect capital expenditures of nearly $405 billion this year and continued growth next year—much of that based on AI data centers filled with Nvidia’s processors.

That’s giving Loop Capital analyst Ananda Baruah the confidence to raise his price target on Nvidia to $350 from $250 in a research note on Monday, suggesting roughly 70% gains lie ahead.

“Our work suggests Nvidia is about to begin a ramp of GPU [graphics-processing units] that will essentially double its unit shipments the next 12-15 months,” Baruah wrote in a research note. “Our work suggests we are entering the next ‘Golden Wave’ of Gen AI adoption and Nvidia is at the front-end of another material leg of stronger-than-anticipated demand.”

One headwind for Nvidia is the suspension of sales to China. President Donald Trump signaled the U.S. will continue to curb exports of the company’s chips to Chinese customers, in an interview with CBS’s 60 Minutes that aired Sunday night.

“We will let them deal with Nvidia but not in terms of the most advanced [chips]. The most advanced, we will not let anybody have them other than the United States,” Trump said.

Nvidia has been targeted by Chinese authorities, that have discouraged the use of its AI processors by domestic customers. Nvidia is currently forecasting no Chinese revenue, which implies a loss of between $2 billion and $5 billion per quarter in potential sales, according to the company’s executives.

However, restrictions look to be easing in other areas. Microsoft said Monday that it had received the first licenses to ship Nvidia chips to the United Arab Emirates. It will export the equivalent of 60,400 additional A100 chips to the Gulf state, in the form of Nvidia’s more advanced GB300 processors.

Among other chip makers, Advanced Micro Devices was rising 0.1% and Broadcom was down 1.3% in morning trading.

Write to Adam Clark at adam.clark@barrons.com