Melius raises Nvidia stock price target to $400 on TAM growth

Nvidia's upbeat earnings outlook and expanded segment disclosure reinforced a bullish AI narrative, with first-quarter Data Center revenue excluding China up 118% year over year and second-quarter growth guided above 100%. Melius raised its price target to $400 from $380, while several other firms also lifted targets to as high as $350 on stronger AI and data-center demand. The stock is trading near its 52-week high, and the article also highlighted a projected $3 trillion to $4 trillion infrastructure TAM by 2030.

Analysis

The key read-through is that this is no longer just a “better Nvidia quarter” story; it is a capex-duration extension across the AI hardware stack. By framing demand around multiple end-markets instead of one opaque data-center bucket, Nvidia is effectively telling customers and suppliers that the buildout is becoming structurally broader and less tied to a single hyperscaler spending cycle. That is bullish for the entire AI infrastructure complex over the next 6-18 months, but it also raises the bar for anyone short the ecosystem: the burden of proof shifts from “can demand stay high?” to “what ends the re-acceleration?”

The second-order winner is not just semis, but the supply chain with the longest lead-time bottlenecks: advanced packaging, HBM memory, substrate vendors, and power/thermal infrastructure. If AI spend is broadening into neoclouds, enterprise, and edge, the mix should become less concentrated but more persistent, which supports component makers with pricing power and manufacturers exposed to multi-year capacity agreements. The risk is that the market extrapolates peak growth into a permanently straight line; if hyperscaler budgets normalize even modestly, high-beta semiconductor multiples can compress faster than earnings can catch up.

Near term, the move looks technically crowded and likely needs digestion after a strong earnings-driven gap higher. The cleanest contrarian view is that the best upside may now be in under-owned secondaries that participate in the capex wave without carrying single-name valuation risk. Over a 3-9 month horizon, the most important catalyst is whether customer capex commentary continues to confirm >100% data-center growth ex-China; if not, this becomes a multiple story rather than an earnings story and could retrace sharply.

Key Decisions for Investors

• Stay long NVDA but finance with out-of-the-money call overwrites into the next 4-8 weeks; implied volatility should remain supported, but upside is increasingly consensus, so monetize skew while protecting core exposure.
• Rotate part of the AI basket from NVDA into HBM/packaging beneficiaries (e.g., MU, AMKR, ASX) for a 3-6 month hold; these names offer similar AI exposure with less multiple risk if the market starts discounting peak growth in the leader.
• Add a pair trade: long semicap / short broader hardware laggards over the next 1-2 quarters; if AI capex extends, tool and packaging leverage should outperform firms dependent on slower enterprise refresh cycles.
• For aggressive traders, buy NVDA call spreads 2-4 months out on any post-earnings consolidation rather than chasing strength; the best risk/reward likely comes on a 5-10% pullback, not after a gap-up melt.