Nvidia (NASDAQ: NVDA) remains a highly sought-after stock in the tech industry, and analysts at Itau BBA have provided a thorough evaluation of its future prospects, establishing a fair price range for the semiconductor giant’s shares.
The analysts recently examined several factors influencing Nvidia’s trajectory, including delays in the release of the Blackwell chip and possible overextension in capital expenditures (capex) by major tech players.
Despite these hurdles, Itau BBA’s analysts have grown more optimistic about Nvidia’s earnings performance over the next two to three quarters.
Contrary to widespread concerns, they suggest that the delay in the Blackwell chip could actually boost Nvidia’s short-term earnings, particularly as the H200 chip outperforms the B100 and B200 models in terms of profitability.
However, the analysts caution about potential risks to Nvidia’s growth projections for 2026. “To justify a 30x P/E ratio for 2025, Nvidia must achieve at least 20% EPS growth in 2026,” they noted.
A capex analysis based on Microsoft’s (NASDAQ: MSFT) spending indicates that if Nvidia continues its current growth trajectory, Microsoft’s capex could consume 100% of its cash flow from operations or EBIT by fiscal year 2026, raising questions about the long-term sustainability of this growth.
To mitigate these concerns, the analysts emphasize the critical role of accelerating AI adoption. They reference Microsoft’s optimistic outlook in a recent earnings call, where the widespread rollout of M365 Copilot was highlighted as a key driver for increased AI infrastructure investment, potentially benefiting Nvidia.
Overall, Itau BBA continues to rate Nvidia as an Outperform, suggesting that its earnings per share (EPS) projection could lead to a fair price range of $150 to $180 per share, based on a 30x P/E ratio for 2025.
