RBC Initiates NVIDIA at Outperform on Sustained AI Spending Outlook

Core Viewpoint - NVIDIA has been initiated with an Outperform rating and a price target of $240.00 by RBC Capital Markets, focusing on the sustainability of AI infrastructure spending and competitive pressures in the market [1] Group 1: Market Dynamics - Investor debate around NVIDIA centers on the sustainability of AI infrastructure spending and competitive pressures, with expectations of elevated cloud capital expenditures over the next 12 to 18 months due to competition among the largest hyperscalers [1] - Any anticipated slowdown in spending is expected to be gradual, with sovereign projects and demand from China potentially acting as offsets [2] Group 2: Company Strengths - NVIDIA's backlog exceeds $500 billion, with accelerating inference demand and expanding enterprise AI adoption reinforcing confidence in the company's growth outlook [2] - RBC is not overly concerned about competitive threats, citing NVIDIA's full-stack performance leadership, ecosystem strength, and balance sheet flexibility [3] Group 3: Valuation Insights - The stock is noted to trade at approximately a 20% discount compared to both semiconductor peers and large-cap technology companies, highlighting favorable valuation [3]