Nvidia stock was gaining early on Monday. Regulators are focused on the chip maker over its dominant position in powering artificial-intelligence technology.
Nvidia shares were up 2% in morning trading. The stock closed down 1.9% on Friday.
The stock has been in a lull ahead of the company’s next earnings report, expected in August. Nvidia received a rare downgrade last week from analysts at New Street Research, arguing the company’s valuation meant it would be hard for shares to rise further.
That call received some instant pushback as UBS analyst Timothy Arcuri raised his target price on the stock to $150 from $120, and reiterated a Buy rating on the stock in a research note on Monday.
The new target price is based on a price-to-earnings multiple of 28 times the average of Arcuri’s forecast for Nvidia’s earnings in 2025 and 2026.
For 2025, Arcuri forecast Nvidia will generate revenue of $204 billion and earnings per share of $4.95. That compares with consensus estimates of revenue of around $157 billion and earnings of $3.57 a share, according to FactSet.
The UBS analyst pointed to large-scale orders for liquid-cooled rack systems which will house large numbers of Nvidia’s upcoming Blackwell chips. Arcuri estimates about 69,000 such systems will ship in 2025, noting that every 5,000 of such shipments add around $9 billion in revenue and 20 cents of earnings per share.
“Sentiment on the stock—though still strong—has faded somewhat in recent weeks…creating more of a wall of worry that should be ultimately healthy if our outlook materializes,” Arcuri wrote.
Apart from earnings, one other concern for Nvidia is the increasing attention of regulators, with U.S. and French authorities both reported in recent months to be investigating the company.
The latest regulator to comment on Nvidia was Margrethe Vestager, the European Union’s competition chief. She said there was a “huge bottleneck” in Nvidia’s chip supply, and the authorities have asked the company questions but no regulatory action was being taken, according to Bloomberg.
Nvidia generally has a strong case because its success has been built on providing a superior product rather than strangling competition in a market with plenty of rival AI chips. However, the industry’s reliance on Nvidia’s CUDA software and the company’s efforts to integrate more areas such as networking infrastructure looks to be causing some disquiet among competition authorities.
Among other chip makers, Advanced Micro Devices stock was up 2.7% and Intel stock was climbing 4.3% in early trading. Server marker Super Micro Computer was rising 6%.
Nvidia shares have risen 154% this year to date through to Friday’s close. That compares with a 17% rise in the S&P 500 index and a 22% rise in the Nasdaq Composite Index over the same period.