TLDR
- Nvidia stock climbed 2.1% Thursday following bullish analyst coverage and positive supplier news
- RBC Capital Markets set $240 price target, representing 28% upside from current trading levels
- Taiwan Semiconductor announced $56 billion capital expenditure plan for 2026, up from $41 billion
- Nvidia’s AI accelerator market share expected to decline from 80% to 70% by 2027
- Analyst expects hyperscaler spending to remain strong for 12-18 months despite competition concerns
Nvidia (NVDA) shares advanced 2.1% Thursday to close at $186.92 after receiving fresh analyst support and encouraging signals from its manufacturing partner. The stock tacked on another 0.4% in after-hours trading.
RBC Capital Markets analyst Srini Pajjuri initiated coverage with an Outperform rating. His $240 price target suggests 28% appreciation potential. The call arrives after three months of sideways trading as investors debated the company’s competitive position.
Taiwan Semiconductor Manufacturing delivered fourth-quarter earnings that topped forecasts. The company’s net profit jumped 35% from the prior year. Management’s capital spending guidance grabbed more attention than the quarterly results.
TSMC revealed plans to invest up to $56 billion in capital expenditures during 2026. The amount represents a 37% increase from 2025’s $41 billion. Analysts expected far lower spending levels. The commitment signals confidence in sustained customer demand.
As Nvidia’s primary chip manufacturer, TSMC uses advanced fabrication processes to produce the company’s GPUs. The elevated investment indicates TSMC anticipates continued strong orders. Manufacturing capacity constraints currently limit how quickly Nvidia can serve customers.
Market Share Under Pressure
Nvidia commands approximately 80% of the AI accelerator space currently. RBC forecasts that dominance will shrink to 70% within two years. Advanced Micro Devices and Google’s custom chips are capturing business.
Customers actively pursue supplier diversification strategies. Google’s Gemini offering has demonstrated renewed momentum. AMD keeps developing competitive AI chip solutions to challenge the market leader.
The analyst doesn’t view the share erosion as threatening. He highlights Nvidia’s performance superiority and comprehensive product suite as protective factors. Expertise in rackscale implementations provides advantages in data center environments.
Production has begun on Nvidia’s Rubin platform. These advanced systems should help maintain the technology gap versus competitors. The Groq development path adds flexibility to the product roadmap.
Investment Cycle Continues
Pajjuri expects major cloud providers to sustain elevated capital spending through mid-2027. The largest hyperscalers possess robust balance sheets funding continued expansion. Competitive dynamics push them to enhance AI infrastructure capabilities.
Questions have emerged about circular financing practices in the sector. The analyst believes these companies remain motivated to deploy capital. Their financial strength supports ongoing facility investments.
Memory chip stocks have captured more investor interest lately. Nvidia hasn’t dominated AI investment conversations in recent weeks. The flat price action reflects this sentiment shift.
Concerns about peak AI spending have circulated among market participants. TSMC’s spending blueprint contradicts that worry. A near 40% spending increase suggests clear visibility into order pipelines. Semiconductor manufacturers don’t allocate such resources without customer commitments.
Fresh Momentum Building
Nvidia’s stock has ranged between $86.62 and $212.19 over the past year. Market capitalization sits at $4.5 trillion. Trading volume reached 8.3 million shares Thursday versus the 183 million daily average.
The company’s Rubin systems entering production marks a key milestone. These platforms deliver performance improvements over previous generations. Full-stack offerings spanning hardware and software create switching costs for customers.
Hyperscaler competition intensifies as companies race to build AI capabilities. Well-capitalized tech giants show no signs of reducing infrastructure investments. Balance sheet strength enables continued spending regardless of near-term economic conditions.
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