Nvidia's Target Price Raised 35.6% by Barclays on AI Data Center Boom

Barclays analysts have revised their target price for Nvidia, increasing it from 200 dollars to 240 dollars. This new target price represents a potential 35.6% increase from the stock's closing price of 176.97 dollars on Wednesday. The analysts' optimism is driven by the recent surge in announcements related to AI data center construction, which has led them to believe that the initial predictions made by Nvidia's CEO regarding the industry's growth were conservative.

The CEO had initially estimated that the AI infrastructure industry would benefit from 10 billion dollars in data center construction by the end of the decade. However, the analysts now believe that the industry's spending could be double or even higher than this estimate. They project that the planned expenditure on AI infrastructure over the same period could exceed 20 billion dollars, equivalent to approximately 40 gigawatts of power. A significant portion of this expenditure, around 65% to 70%, is expected to be allocated to computational and networking equipment needs. The analysts also noted that with more transactions potentially in the works, the CEO's updated prediction of 30 billion to 40 billion dollars in AI infrastructure spending starts to seem more plausible.

Barclays' report, released on Thursday, suggests that the estimates for the potential market size of AI, based on the observed increase in computational power over the past year, no longer seem far-fetched. The report also highlights that Nvidia appears to be the most attractive stock among the semiconductor stocks covered by Barclays. This assessment is based on the company's leading position in the construction of AI infrastructure, which is expected to drive significant growth in the coming years.