NVIDIA (NVDA) Reiterated as Buy – Analysts See AI Capex Upside “More Important Than Ever”

The race to dominate artificial intelligence has thrust NVIDIA (NVDA) into the center of one of the most transformative technological eras in history. Analysts, despite near-term risks tied to U.S.-China trade tensions and regulatory uncertainty, have reaffirmed their bullish stance on the company, with many arguing that the stakes for AI infrastructure spending have never been higher. Here’s why the buy rating holds—and what investors should watch next.

The Bull Case: Hyperscalers Double Down on AI

The core of NVIDIA’s story lies in its dominance of AI hardware for hyperscale cloud providers like Microsoft (MSFT), Amazon (AMZN), Meta (META), and Alphabet (GOOGL). These four companies alone account for ~53% of NVIDIA’s revenue, and their CapEx plans are unambiguous:
- Microsoft: Azure’s AI-driven revenue grew to 16% of its total cloud growth in Q3 FY2025, up from 13% just a quarter earlier. CEO Satya Nadella dismissed claims of a data-center slowdown, calling regional adjustments “a normal part of capacity planning.”
- Meta: Raised 2025 CapEx to $68 billion from $62.5 billion, with explicit allocations for AI data centers.
- Amazon: Confirmed no slowdown in data-center demand, with its VP of global infrastructure stating, “Demand is only going up.”

This spending isn’t just sustaining NVIDIA—it’s accelerating it. Analysts project NVIDIA’s data-center revenue to hit $43 billion in Q1 FY2026, a 65% year-over-year jump, driven by sales of its next-gen Blackwell chips.

Blackwell: The Chip That Could Redefine AI

The Blackwell chip, NVIDIA’s most advanced AI accelerator, is the linchpin of its growth story. With 100,000+ units already deployed in Oracle’s (ORCL) Superclusters and Alphabet’s cloud, it’s proving its scalability:
- Project Stargate: A $500 billion AI data-center venture between OpenAI and SoftBank, requiring 400,000 Blackwell B200 chips, could generate $12–$16 billion in revenue for NVIDIA alone.
- Performance: Blackwell’s efficiency—16 times faster than its predecessor—has made it a must-have for training large language models.

Analyst Harsh Kumar of Piper Sandler notes that even in a worst-case scenario where China demand stalls, NVIDIA’s data-center segment could still grow, thanks to Blackwell’s U.S. adoption. “The chip’s momentum,” he writes, “is why downside risks are overstated.”

Supply Chain Validation: TSMC and Lam Research Back the Narrative

NVIDIA’s suppliers are echoing the bullish sentiment. Taiwan Semiconductor Manufacturing (TSMC), its primary chipmaker, projects AI-related revenue to double in 2025, with $38–42 billion in CapEx (70% for advanced nodes) to meet demand. Lam Research (LRCX), a semiconductor equipment giant, reported 63% revenue growth through 2029, directly tied to AI infrastructure needs.

This supply-side support is critical. As one analyst put it, “If TSMC and Lam aren’t seeing softness, neither is NVIDIA.”

Risks and Regulatory Crosswinds

No investment is without risks. The Trump administration’s export restrictions on NVIDIA’s H20 chips to China could cost the company $15 billion in annual revenue, with a $4–$5 billion sequential hit to Q3 2025 earnings. Meanwhile, proposed revisions to the “AI diffusion” rules—lowering licensing thresholds and tightening export controls—could complicate global chip sales.

Yet analysts argue these risks are manageable. Piper Sandler estimates a worst-case scenario would still leave NVIDIA’s stock at $76.25, far below its current price. The upside? A $163.65 consensus price target (43% above current levels), driven by hyperscaler resilience and Blackwell’s scalability.

The Bottom Line: AI’s Future Is NVIDIA’s Future

NVIDIA’s Buy rating isn’t just about today’s earnings—it’s about owning the infrastructure of tomorrow. With $43 billion in Q1 FY2026 revenue guidance, 87% of brokerages rating it Buy/Outperform, and hyperscalers doubling down on AI, the company’s valuation looks compelling. Even at a forward P/E of 26x, it trades below its growth trajectory.

The May 28 earnings report will test this optimism, but the bigger picture is clear: In a world racing to build AI supercomputers, NVIDIA is the engine. For investors, the question isn’t whether to buy—it’s whether to wait.

Final Analysis: Analysts see NVIDIA’s AI CapEx upside as a multiyear growth story, with risks now priced into its stock. At current valuations, the firm remains a key beneficiary of the AI revolution—more important than ever.