nvidia's growth forecast tempered: what it means for ai

2025-04-11 nvidia

New York, Friday, 11 April 2025.
Nvidia’s stock valuation faces scrutiny. Citi analysts reduced Nvidia’s price target due to concerns that major cloud providers might curb their AI infrastructure spending in 2025-2026. This adjustment signals a potential cooling in the previously red-hot AI sector. Citi now projects a more modest increase of 35% in data center capital expenditures for 2025, followed by 15% growth in 2026. The initial estimates were 40% and 20% respectively. The revised outlook reflects broader economic concerns and shifts in Microsoft’s investment strategies.

revised price target

Citi analyst Atif Malik decreased Nvidia’s price target to $150 from $163, while still keeping a Buy rating on the stock [3][6]. This adjustment reflects a more cautious outlook on Nvidia’s near-term revenue potential. Malik also trimmed earnings forecasts for Nvidia by 3% in 2025 and 6% in 2026 [7]. The analyst cited potential trade tensions between the U.S. and China as another factor influencing the revised projections [7]. Despite these concerns, Malik’s maintained Buy rating suggests continued confidence in Nvidia’s long-term prospects [3][6].

market reaction and stock performance

Nvidia’s stock responded positively to the news on Friday, closing up 3.1% at $110.93, despite the lowered outlook [3]. This suggests that investors may have already factored in some moderation in growth expectations. Marvell Technology, another AI chipmaker, saw a similar boost, rising 1.1% to $53.39 [3]. The Nasdaq overall experienced volatility, closing down 4% on April 10 after the U.S. confirmed tariffs, but it jumped over 12% following a pause in tariffs, with Nvidia closing up 18.7% [8].

competitive landscape and strategic adjustments

Amidst evolving market dynamics, Nvidia may consider raising GPU prices to offset rising costs. However, this strategy carries the risk of compressing margins [7]. Citi also reduced its AI chip estimates for Marvell by 20%, anticipating that Amazon might diversify its ASIC suppliers for future Trainium products [7]. These adjustments reflect a broader trend where major cloud players are reevaluating their infrastructure investments and exploring alternative sourcing strategies [7]. This could intensify competition in the AI chip market.

analyst track record

Despite the price target cut, Citi analyst Atif Malik has a solid track record. TipRanks data indicates a success rate of 70.8% with an average return of 33.8% over the past year [5]. This suggests that while short-term forecasts may be subject to revision, Malik’s broader analysis tends to be reliable. The TipRanks system assesses analysts based on their success rate and average return, offering a means to evaluate the reliability of their recommendations [5]. This information is purely for informational purposes and not an investment recommendation [5].

Bronnen

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