This Analyst Sees Nvidia at $8.5 Trillion Next Year. Is It Even Possible?

Core Viewpoint - Analysts are increasingly optimistic about Nvidia's stock, with price targets rising significantly, reflecting strong revenue growth and demand for AI computing [1][3]. Price Target Increases - Evercore ISI analyst Mark Lipacis raised the price target for Nvidia from $261 to $352, indicating a potential 101% increase from current levels [1][3]. - Lipacis has a successful track record, with 69% of his ratings being successful and an average return of 28.3% over the past year, ranking him highly among Wall Street analysts [2]. Revenue Growth and Inventory - Nvidia's inventory buildup is seen positively, as it is intended to meet unprecedented AI compute demand rather than indicating excess supply [4]. - The company's backlog for 2025 and 2026 is estimated at $500 billion, suggesting strong future demand [4]. - Revenue growth is projected to accelerate to 79% by mid-2026, which could lead to a higher premium on Nvidia's stock [5]. Competitive Landscape - Nvidia maintains a strong competitive edge in the AI chip market, with competitors struggling to match its offerings [6]. - The difficulty and cost for hyperscalers to switch from Nvidia's CUDA ecosystem further solidify Nvidia's market position [6]. - A case study of Chinese AI startup DeepSeek illustrates the challenges faced by companies attempting to use alternative chips, reinforcing Nvidia's dominance [7]. Market Dynamics and Investment Considerations - While Nvidia is currently performing well, the sustainability of its stock rally is uncertain, dependent on the ongoing AI revolution [8]. - Major companies like Alphabet and Amazon are developing their own AI chips to reduce reliance on Nvidia, which could impact future demand [9]. - There is a cautionary note regarding Nvidia's potential future performance, with comparisons to IBM and Cisco, suggesting that investors should maintain a balanced portfolio allocation to Nvidia [10].