TLDR
- Goldman Sachs raised Nvidia’s price target to $210 from $200, maintaining a Buy rating, indicating 12% upside potential
- The upgrade is based on Nvidia’s partnerships with OpenAI and other AI companies, which could drive demand for its GPUs
- Analyst James Schneider warns of “circular revenue” concerns, where Nvidia’s investments in companies like OpenAI loop back through GPU purchases
- OpenAI’s infrastructure spending may require up to $75 billion in 2026, with projects heavily dependent on Nvidia chips
- Wall Street consensus remains Strong Buy with 36 Buy ratings, two Holds, and one Sell, with average price target of $216.50
Goldman Sachs analyst James Schneider raised his price target on Nvidia to $210 from $200 on Monday. He kept his Buy rating on the stock.
The new target represents about 12% upside from current trading levels. Nvidia closed at $187.62, near its 52-week high of $191.05.
Schneider pointed to Nvidia’s growing network of AI partnerships as the main reason for his increased target. The chipmaker has announced strategic investments and deals with OpenAI and other companies.
These partnerships could create fresh demand for Nvidia’s GPUs. The analyst said they also reinforce Nvidia’s position in the AI infrastructure market.
OpenAI’s Spending Plans Drive Outlook
OpenAI’s infrastructure needs are expanding rapidly. Goldman Sachs estimates the company may need up to $75 billion in 2026 alone.
That funding would support self-built data centers equipped with Nvidia GPUs. It would also back the Stargate project and other initiatives.
Oracle recently raised $18 billion in debt to support OpenAI’s infrastructure. Goldman Sachs said this project appears to be gaining strong traction in the market.
These data center builds will rely heavily on Nvidia’s chips. Schneider said this creates a clear path for continued GPU sales.
The analyst noted that OpenAI will increasingly depend on equity and debt financing for its spending. This external funding could help drive legitimate demand for Nvidia’s products.
The Circular Revenue Warning
Schneider also raised concerns about the structure of some deals. He warned that Nvidia’s investments in companies like OpenAI could create what he calls “circular revenue.”
This happens when Nvidia invests money in a company that then uses those funds to buy Nvidia chips. The sales appear on Nvidia’s books but are partly funded by its own capital.
The analyst said this dual role as both investor and supplier requires extra scrutiny. It could make some revenue less valuable than traditional customer sales.
Schneider explained that circular revenue might boost short-term sales figures. However, it could make long-term growth less predictable.
He added that investors should pay close attention to how much demand comes from outside funding versus Nvidia’s own investments. This distinction matters for valuing the stock.
Goldman Sachs noted that circular revenue could be dilutive to Nvidia’s valuation multiple. The firm’s P/E ratio currently sits at 53.36.
The analyst still sees the partnerships as positive overall. But he wants investors to understand the nuances of how some revenue is generated.
Wall Street’s View
Most analysts remain bullish on Nvidia. The stock has a Strong Buy consensus rating based on 36 Buy recommendations, two Holds, and one Sell.
The average price target among Wall Street analysts is $216.50. This suggests 15.39% upside potential from current levels.
Goldman Sachs’ $210 target sits slightly below the Street average. The firm maintains its Buy rating despite the circular revenue concerns.
Nvidia’s partnerships continue to expand across the AI sector. Microsoft recently announced a $19.4 billion deal with Nebius Group to secure over 100,000 of Nvidia’s latest chips.
Cantor Fitzgerald has a $240 price target on the stock. The firm called Nvidia’s OpenAI investment a strategic move that strengthens its infrastructure position.
Goldman Sachs raised its price target to $210 on Monday, citing Nvidia’s AI partnerships while warning investors about circular revenue risks.
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