Breaking News: Citi Analysts Discuss Key Topics on Nvidia Stock in Boston and Europe | AI Adoption in Full Swing, Sales and Margin Inflection Expected Post CES Event 2025
In a recent roadshow in Boston and Europe, Citi analysts engaged with investors to shed light on the future of Nvidia (NASDAQ:) stock. The Wall Street firm highlighted that the company's AI adoption is still in the early stages, with enterprise AI demand set to soar with the rise of AI agents.
Analysts anticipate that Nvidia stock will remain range-bound leading up to the CES event in early 2025. However, the launch of new products like Blackwell GPUs is expected to drive a significant sales and margin upturn.
One recurring concern among investors is Nvidia's gross margin trajectory. Citi predicts that gross margins will hit a low point of around 72% in the January quarter before stabilizing in the mid-70s once the Blackwell series gains momentum.
Another focal point is the competition between Nvidia's GPUs and custom ASICs. While ASICs may have their advantages for specific applications, Nvidia GPUs offer unmatched versatility.
As the demand for AI models continues to grow, Nvidia's GPUs, with their ability to handle a wide range of applications, are likely to see sustained demand. Furthermore, enterprises are increasingly adopting multi-cloud strategies, and Nvidia GPUs allow applications to run seamlessly across different cloud platforms without the need for rewriting.
Citi also emphasizes Nvidia's leading position in terms of total cost of ownership (TCO) and return on investment (ROI) in data centers. The company's ability to run diverse applications, including AI, sets it apart from competitors.
Investors are also closely monitoring Nvidia's vertical integration strategy, which has evolved from chips to entire systems in response to the slowdown of Moore's Law. The shift towards the GB200 format from the B100's 8-GPU format is expected to further optimize TCO and ROI.
Looking ahead, investors are optimistic about the long-term ROI potential, especially with Nvidia's strong focus on AI in key markets like social media and e-commerce. However, it is crucial to exercise patience as generative AI matures into disruptive business models.
With a Buy rating and a price target of $150, Citi remains bullish on Nvidia. However, potential risks include competition in gaming and market volatility in the auto and data center segments.
In conclusion, Nvidia's stock is poised for growth as the company continues to innovate in the AI space and expand its product offerings. Investors should keep a close eye on developments in the coming months to capitalize on potential opportunities in the market.