nvidia's bumpy ai ride: price target slashed despite trillion-dollar surge
New York, Monday, 28 April 2025.
Despite adding over $2.2 trillion to its market capitalization since early 2023, nvidia’s price target faced a cut to $125. This adjustment comes amid rising costs associated with AI infrastructure. While the IMF anticipates economic gains from AI exceeding costs, the considerable capital expenditure raises concerns. This target revision could signal worries regarding the sustainability of nvidia’s growth and profitability given escalating infrastructure demands. The company’s stock performance is now under scrutiny as investors weigh the potential impact of these expenses.
Analyst ratings and price targets
Despite the lowered price target, other analysts maintain a positive outlook on nvidia. Cantor Fitzgerald reiterated an overweight rating with a $175 price target [3]. Morgan Stanley adjusted its price target to $162, maintaining an overweight rating [2]. FactSet’s survey of analysts indicates an average rating of buy for nvidia, with an average target price of $176.06 [2]. These varied perspectives highlight the differing opinions on nvidia’s valuation and future performance amid evolving market conditions and infrastructure costs.
The ai inference boom and gpu demand
The demand for nvidia’s GPUs remains strong, driven by the increasing need for AI inference [5]. Morgan Stanley reported a surge in token generation, increasing over fivefold since the beginning of the year, putting immense pressure on the ecosystem and driving investments in processing these workloads [5]. This demand is fueled by the expansion of inference models, which is fundamentally different from venture capital-dependent training needs, as it is driven by actual usage and revenue generation [5]. However, supply constraints, especially for the Blackwell chips, persist [5].
Supply constraints and future growth
Despite robust demand, nvidia faces supply limitations, particularly with its Blackwell chips like the GB200/300 models [5]. These constraints hinder nvidia’s ability to immediately meet the rapidly growing demand [5]. While demand for Hopper GPUs is improving, the investment return may not be ideal, considering the 5-6 year depreciation cycle of cloud customers [5]. Morgan Stanley has adjusted its target price to $160, slightly down from $162, primarily reflecting a decline in overall peer group valuation rather than fundamental changes in the company [5].
Financial metrics and market sentiment
Nvidia’s stock currently trades around $111, which is approximately 45% higher than Morgan Stanley’s target price [5]. Despite short-term concerns about profitability due to factors like supply constraints and export restrictions, Morgan Stanley remains confident in nvidia’s long-term growth potential [5]. They increased their fiscal year 2026 revenue forecast by 10.7% and earnings per share by 11.9%, suggesting these figures could still be conservative [5]. On April 28, 2025, nvidia’s stock price was $111.01, up 4.30% [2].
Nvidia’s market position and future prospects
Nvidia’s total market capitalization stands at $2.71 trillion, with a price-to-earnings ratio of 37.76 [4]. The company’s 52-week high is $153.116, while the low is $81.228 [4]. Nvidia is expected to launch its next-generation AI chip, Blackwell Ultra (GB300 series), in the second half of 2025 [8]. Furthermore, the company plans to ship Quantum-X InfiniBand in the second half of 2025 and Spectrum-X Photonics in the second half of 2026, indicating ongoing innovation and expansion in its product offerings [8].