BING-JHEN HONG
Nvidia (NASDAQ:NVDA) was in focus on Thursday as Bank of America maintained its Buy rating after a meeting with management. Separately, a new report suggested that Chinese companies are hesitating switching to alternatives, despite the new export curb controls from the Trump administration.
Bank of America analyst Vivek Arya said the tone of the meeting with Nvidia CFO Colette Kress and an investor relations executive was “very positive,” as demand and customer interest across both the enterprise and cloud remain strong.
“Importantly, we believe NVDA addressed three key investor debates that have been holding back the stock over the last year: Blackwell rack ramp/execution; AI Diffusion and sovereign demand; and China AI shipments,” Arya wrote in a note to clients. “We maintain Buy, a top sector pick with a $180 PO as we believe NVDA remains best positioned to benefit from the ongoing AI tide, supported by a multi-year lead in performance (AI scaling), pipeline, incumbency, scale, and developer support.”
Additionally, Nvidia’s management said the transition to Blackwell Ultra should be smoother than the transition to Blackwell from Hopper, while the ramp-up costs should be “limited,” removing any concern about gross margins, Arya added.
China surprise?
Separately, the China risk has now been fully removed from its numbers, as there are no China-related sales in current data center forecasts, Arya said, while adding that the rise of sovereign artificial intelligence (as evidenced by the recent sales to Saudi Arabia) are just beginning.
“NVDA expects each major sovereign to have its own foundational/frontier models, all of which would have to be continuously updated to feed latest info as with any other hyperscaler frontier models,” Arya explained.
Lastly, Nvidia believes that 1 gigawatt of data center installment could be worth $50B across its tech stack. And with between 5 and 7 gigawatts worth of data center capacity having been installed just this year, that could be worth roughly $250B to $350B for Nvidia, compared to its current pipeline of approximately $175B, Arya added.
Separately on Thursday, The Information reported Huawei — which has become the alternative in China to Nvidia given the aforementioned export controls — has struggled with sales to the Chinese tech giants such as Alibaba (BABA), Baidu (BIDU) and others.
Huawei did not immediately respond to a request for comment from Seeking Alpha.