TLDR
- Barclays raised Nvidia price target to $240 from $200, indicating 36% potential upside
- Over $2 trillion in AI infrastructure spending expected to benefit Nvidia’s core business
- Nvidia’s OpenAI partnership involves up to $100 billion commitment for data center chips
- Earnings per share projected to more than double from $3 to $6.93 by fiscal 2027
- Stock remains flat despite massive AI investment announcements from tech companies
Nvidia shares traded lower in premarket activity Thursday despite receiving a major price target upgrade from Barclays. The investment bank raised its target to $240 from $200, suggesting 36% upside from current levels near $176.
Analyst Tom O’Malley maintained his Overweight rating while calling Nvidia “the most attractive name in our space.” The upgrade comes as AI infrastructure spending reaches unprecedented levels across the technology sector.
The stock has remained largely flat over the past month despite tech giants announcing massive AI investments. Nvidia fell 0.8% Wednesday and dropped another 0.3% in premarket trading Thursday.
$2 Trillion AI Infrastructure Wave
O’Malley identified over $2 trillion in planned AI spending across approximately 40 gigawatts of power capacity. This represents rapid expansion in AI investment scale over the past year.
Barclays estimates 65-70% of this spending will target compute and networking infrastructure. This plays directly into Nvidia’s core strengths as the dominant GPU provider for AI workloads.
The analyst expects this money to flow into Nvidia’s financial results over the next five years. More deals remain in the pipeline, making updated guidance of $3-4 trillion in total AI spending appear increasingly realistic.
Barclays projects Nvidia’s adjusted earnings per share will surge from $3 in fiscal 2025 to $6.93 by fiscal 2027. This represents a 53% year-over-year increase by the final year.
OpenAI Partnership Solidifies Position
Nvidia announced Monday it will commit up to $100 billion to OpenAI, providing the ChatGPT maker with data center chips. The partnership formalizes a major relationship in the expanding AI infrastructure race.
The companies signed a letter of intent covering at least 10 gigawatts of Nvidia systems. Final terms are expected within weeks.
O’Malley noted the new $240 target uses a 35 times earnings multiple, up from 29 times previously. This reflects potential upside from continued AI momentum and data center builds.
Market Dominance Despite Competition
Nvidia maintains its central position in the AI ecosystem despite emerging custom silicon and competing accelerators. Barclays’ AI tracker identifies 19 million GPUs tied to announced projects.
Hyperscalers including Amazon, Microsoft, Google, Oracle and Meta drive much of this demand. Usage growth in AI applications continues accelerating, with ChatGPT message volumes jumping 482% in June.
Barclays set an upside case of $300 per share assuming a larger AI market and stronger margins. The downside scenario targets $140, reflecting risks like weaker spending and pricing pressure.
Other semiconductor stocks declined in premarket trading. Advanced Micro Devices fell 0.7% while Broadcom dropped 0.2%.
The analyst expects Nvidia to remain the primary beneficiary as the $2 trillion AI infrastructure spending wave unfolds over the next five years.
