A Citi analyst sees Nvidia's stock rising another 20% as the AI opportunity swells further, but he notes the risk of potential new geopolitical restrictions ahead
Nvidia Corp.'s stock could rally another 20%, based on the latest price target from a Citi Research analyst who thinks the opportunity in artificial intelligence is only getting bigger.
Citi's Atif Malik boosted his price target on Nvidia shares (NVDA) to $190 from $180 on Monday, with Malik now calculating that the total addressable market for data-center AI chips could be $563 billion by 2028. That's above his prior projection of $500 billion.
Nvidia stands to benefit from the rapid rise of sovereign AI, which refers to countries looking to build out their own AI infrastructure. In 2025 alone, this business could contribute "up to billions of dollars" to Nvidia's top line, and Malik thinks sovereign AI will come to make up an even bigger portion of Nvidia's business mix next year.
"Nvidia has line of sight to [tens of gigawatts] over the next couple of years for enterprise and sovereign AI factory buildouts and the company is involved in essentially every sovereign deal," Malik wrote.
Meanwhile, he's upbeat about Nvidia's ability to boost its adjusted gross margins back to numbers in the mid-70% range by the end of its fiscal year, as the company works past some of the issues that were involved in the early transition to its new Blackwell platform. Nvidia is confident as well, he noted, with that optimism "based on what it has seen in terms of Blackwell ramp for GB200 and what it expects GB300 ramp to eventually be," referring to the company's older and newer Blackwell products.
However, Malik sees risk to Nvidia stemming from the Trump administration's potential new rules restricting shipments of some AI chips to Southeast Asia.
Last week, Bloomberg reported that President Donald Trump is planning to curb shipments of advanced chips to Malaysia and Thailand to prevent intermediaries from smuggling them into China, where they are banned for sale by the U.S. The decision is not final and could change, according to Bloomberg, which cited unnamed people familiar with the matter.
The ban "could pose modest risk" for the chip maker, Malik said. However, the Citi team "[believes] Nvidia has good ways to track its GPUs."
Nvidia shares are down 0.7% on Monday trading, edging further away from the $160.46 level needed to surpass a $4 trillion closing market capitalization, according to Dow Jones Market Data. Nvidia now is $3.86 trillion valuation.
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