Citigroup Boosts NVIDIA Target Price 20% on Strong Earnings, Guidance

Citigroup has reaffirmed its bullish stance on NVIDIA Corporation (NVDA.US), maintaining a "buy" rating and increasing the target price from $150 to $180. This decision is based on the expectation of improved gross margins for the company. NVIDIA's first-quarter earnings met expectations, and the company forecasted second-quarter revenue of $450 billion, exceeding Citigroup's estimate by approximately $10 billion. This strong performance and guidance indicate that NVIDIA has effectively navigated the challenges posed by U.S. restrictions on chip exports.

The company's Blackwell product line generated $240 billion in sales, surpassing the expected $200 billion. Management also confirmed the goal of achieving around 75% gross margins later this year, demonstrating confidence in the profitability of the Blackwell line. Citigroup has adjusted its earnings per share (EPS) forecasts for NVIDIA, with the 2026 fiscal year's EPS growth remaining in line with previous estimates. However, the 2027 fiscal year's EPS is now projected to increase by 9%, and the 2028 fiscal year's EPS is expected to rise by 5%. These adjustments reflect Citigroup's anticipation of higher gross margins for NVIDIA.

The upward revision in EPS forecasts for the 2027 and 2028 fiscal years indicates Citigroup's confidence in NVIDIA's ability to enhance its profitability. This optimism is likely driven by several factors, including the company's strong market position in the semiconductor industry, its innovative product offerings, and its strategic investments in emerging technologies. NVIDIA's success in these areas has positioned it as one of the most attractive semiconductor stocks in the U.S. market.

Citigroup's decision to maintain a "buy" rating on NVIDIA, along with the increase in the target price, underscores the firm's positive outlook on the company's future performance. This rating suggests that Citigroup believes NVIDIA's stock is undervalued relative to its growth potential and that investors should consider adding the company to their portfolios. The adjustment in EPS forecasts and the increase in the target price are significant developments for NVIDIA, as they provide a clear indication of the company's expected financial performance in the coming years.

Investors and analysts will closely monitor NVIDIA's progress in achieving these targets, as success in this regard could further validate Citigroup's bullish stance and potentially drive additional gains for the company's stock. The strong performance and guidance from NVIDIA, coupled with Citigroup's positive outlook, position the company for continued growth and profitability in the semiconductor industry.