Nvidia (NVDA) shares rose nearly 5% on Tuesday following bullish notes from Wall Street analysts citing strong demand for chips ahead of its earnings report scheduled for Wednesday afternoon.
In a client note this week, Stifel analyst Ruben Roy raised his price target on Nvidia to $180 from $165, while Truist Securities’ William Stein raised his price outlook to $167 from $148.
Roy cited “a diverse set of data points,” including continued high spending on AI infrastructure by hyperscalers and demand for Nvidia’s latest Blackwell AI chips.
“We believe NVDA is well positioned in markets that combine to produce an overall TAM [total addressable market, or revenue opportunity] of more than $100 billion by 2025 and a longer-term opportunity funnel that could approach $1 trillion,” Roy wrote.
Nvidia shares also rose on news that one of its customers, cloud provider Nebius Group (NBIS), is launching its first GPU cluster in the US, which will use up to 35,000 Nvidia chips. A GPU cluster is a network of graphics processing units, or AI chips, with massive computing power used to train and run artificial intelligence software.
For reference, Nebius’ order of 35,000 Nvidia chips is equivalent to about 4% of the volume of Hopper AI chips that Wall Street analysts expect Nvidia to have shipped in the October period, Bloomberg consensus data shows.
Nvidia declined to comment on the deal.
Nvidia’s stock rise comes a day after shares fell following an Information report about overheating issues with its Blackwell AI servers. In August Nvidia was reportedly dealing with design flaws related to the individual Blackwell chips themselves, leading the company to delay the production ramp of the chips until the January quarter.
Nvidia has not confirmed overheating issues with its Blackwell servers, and the company told Yahoo Finance on Monday: “Engineering iterations are normal and expected.”
Truist Securities’ Stein said of the overheating issues reported this week: “Conversations with our industry contacts don’t exactly corroborate this latest data, but they do reflect supply chain challenges around the production ramp.” .
Despite the reported issues with Blackwell, Dell Technologies (DELL) said it has already shipped its latest AI hardware product, the PowerEdge system, with Nvidia’s latest GB200 NVL72 systems.
“[C]Feedback from NVDA, our partners and our industry contacts is overwhelmingly positive,” Stein wrote in a note to investors. He noted emerging demand for Nvidia chips in the “traditional” computing and robotics sectors, as well as from artificial intelligence software developers.