ised his outlook for Nvidia's data center semis AI TAM, projecting a 13% increase to $563 billion by 2028. The boost stems from stronger-than-expected demand from sovereign AI initiatives and a 32

Citi analyst Atif Malik has expressed a bullish outlook for Nvidia's data center semiconductors, projecting a significant increase in the Total Addressable Market (TAM) for AI data center semiconductors. Here's a detailed analysis:

1. **Increased TAM Projection**: Malik has projected the 2028 TAM for AI data center semiconductors to reach $563 billion, up from the previous estimate of $500 billion. This indicates a 13% increase in the market size, reflecting stronger demand for AI infrastructure and networking.
2. **Sovereign Demand Driving Growth**: The increased TAM is largely attributed to stronger-than-expected sovereign investment in AI infrastructure. This suggests that governments and organizations are accelerating their adoption of AI technologies, which is a positive indicator for Nvidia's business model.
3. **Networking Component's Expansion**: Citi has also revised its networking TAM forecast, increasing it to $119 billion by 2028, up from the previous $90 billion. Networking is expected to constitute 21% of the AI data center TAM by 2028, up from the previous estimate of 18%. This growth is driven by the need for larger AI training clusters and expanded data networking.
4. **Nvidia's Strategic Positioning**: Nvidia's networking sales within its data center business are projected to rise by 12% in 2027 and 27% in 2028, accounting for roughly 20% of total data center revenue. The company's technological advancements, particularly in the Blackwell platform, are expected to support gross margin expansion to the mid-70% range. This highlights Nvidia's strategic positioning in the AI data center market.
5. **Citi's Confidence in Nvidia**: The price target increase to $190 from $180 reflects Citi's growing confidence in Nvidia's leadership in AI and its ability to outpace market expectations. The analyst's upward revisions in EPS forecasts further underscore this confidence.

In conclusion, Citi's outlook for Nvidia's data center semiconductors is optimistic, driven by the expanding TAM, strong sovereign demand, and the growing importance of networking within the AI data center market. Nvidia's strategic positioning and technological advancements are expected to position it well for continued growth and market leadership.