Analyst calls Nvidia ‘no brainer’ as tech spending on AI is ‘crazy’

Nvidia is proving itself a key beneficiary as technology companies “spend like crazy” to take advantage of artificial intelligence, according to Melius Research. “Sometimes a no brainer is a no brainer,” analyst Ben Reitzes wrote on Monday. The largest cloud computing networks “are the foundation for demand for Nvidia’s GPUs – and they are all spending ~20% more on chips than we thought over the next few years,” he wrote, referring to graphics processing units. The analyst reiterated a buy rating on Nvidia and raised his price target more than 11% to $1,125, equal to more than 28% upside from Friday’s $877.35 close. Reitzes’ bullish take is tied to how aggressively he says technology companies and fellow chipmakers are pursuing artificial general intelligence, or artificial intelligence most closely akin to human reconnaissance. Nvidia will remain an essential piece of any tech firm’s AI pursuits, he said. NVDA YTD mountain Nvidia stock. “[T]he big clouds are going to have to spend their share on Nvidia, up to 25% of Capex for Microsoft and Meta this year alone,” he said. Nvidia has climbed almost 76% in 2024 though Monday morning as investor enthusiasm for AI continued, after more than tripling in 2023. The stock has pulled back almost 4% in April. Nvidia posted rapid revenue growth in its most recent quarterly results released in mid-February, issuing higher-than-expected forward guidance for first-quarter earnings due on May 22. But Reitzes posits that Nvidia has plenty of runway to expand further, boosted by the company’s recently unveiled Blackwell, its latest AI GPU. “While H100’s are still selling well, we are encouraged by Nvidia’s Blackwell line, which includes richly configured systems. We believe that its share of inferencing will be higher than expected since its performance is unmatched,” the analyst said. — CNBC’s Michael Bloom contributed to this report.