Citi lifts Nvidia price target heading into AI giant's earnings report

Citi maintained its Buy rating on Nvidia and raised its price target to $220, anticipating a significant beat on third-quarter sales with a forecast of $56.8 billion against Wall Street's $54.6 billion, alongside strong fourth-quarter guidance. This optimism stems from stronger-than-expected AI investments and the rapid deployment of Blackwell units, leading the analyst to increase the 2028 data center semiconductors total addressable market forecast to $654 billion. The stock's current P/E of 28x is also highlighted as attractive compared to AI peers.

Analysis

Citi has reiterated its "Buy" rating on Nvidia (NVDA) and increased its price target to $220 from $210, implying a 17% upside. This upward revision is driven by analyst Atif Malik's expectation of robust third-quarter performance, forecasting sales of $56.8 billion, significantly above Wall Street's consensus of $54.6 billion. The analyst anticipates a "beat and raise" scenario for the upcoming earnings report on November 19.

The positive outlook stems from stronger-than-expected AI investments and the rapid deployment of 6 million Blackwell units, leading to an 11% upward revision in October-quarter estimates. Furthermore, Malik has raised his 2028 data center semiconductor total addressable market (TAM) forecast by 16% to $654 billion, indicating substantial long-term growth potential. He models Q4 (Jan-Q) guidance at $62 billion, exceeding the Street's ~$61 billion.

Nvidia's current valuation, with a P/E ratio of 28x, is highlighted as attractive when compared to AI peers such as Broadcom (AVGO) at 38x and AMD at 37x. This relative valuation suggests that despite recent gains, the stock may still offer value compared to its industry counterparts given its strong growth trajectory and market leadership in AI.

Key Decisions for Investors

• Investors should consider Nvidia's strong Q3 sales forecast and optimistic Q4 guidance as potential catalysts for continued stock performance.
• Monitor the pace of AI infrastructure investments and Blackwell unit deployments, as these are key drivers for the revised long-term data center TAM.
• Evaluate NVDA's current P/E of 28x against AI peers like AVGO and AMD to assess relative value, considering its projected growth and market position.