Wall Street Can’t Get Enough of Nvidia Stock. Is It a Buy Below $180?

Core Viewpoint - Nvidia has received a positive outlook from Wall Street, with Barclays analyst Tom O'Malley raising the price target to $240 from $200, maintaining an "Overweight" rating due to optimism around Nvidia's position in AI infrastructure spending [1]. Group 1: Market Potential - Barclays estimates over $2 trillion will be spent on planned AI initiatives across approximately 40 gigawatts of global capacity in the next four to five years [2]. - Each gigawatt is estimated to require $50-60 billion and around 500,000 graphics processing units, positioning Nvidia to capture a significant share of this buildout [2]. - Approximately 65-70% of the AI spending, around $1.5 trillion, is expected to be directed towards compute and networking capabilities, where Nvidia holds market leadership [4]. Group 2: Capacity Additions - Significant projects include Meta's 2-gigawatt project, the 10-gigawatt Stargate initiative with OpenAI and partners, and various sub-1-gigawatt projects from Microsoft, Amazon, and Alphabet [5]. - International expansion in regions like Saudi Arabia and South Korea is expected to further enhance growth momentum [5]. Group 3: Stock Performance and Valuation - Nvidia stock has outperformed the market over the past decade but has remained flat in the last month [6]. - The new price target of $240 suggests an upside potential of nearly 40% from current levels, based on a 35x price-to-earnings multiple on projected 2026 earnings per share, up from a previous multiple of 29x [6]. - Despite recent performance challenges amid broader AI stock rotations, the fundamental outlook remains strong, with significant infrastructure spending on the horizon [7]. Group 4: Strategic Initiatives - Nvidia is implementing a comprehensive strategy to solidify its leadership in the AI ecosystem through partnerships, infrastructure investments, and open-source initiatives [9].