Nvidia (NASDAQ:NVDA) continues to be one of the most demanded stocks in the tech sector, with Itau BBA analysts offering a detailed assessment of its prospects and a fair price range for the semiconductor company’s shares.
The analysts recently reviewed several factors impacting Nvidia, including delays in the Blackwell chip and potential concerns around capital expenditure (capex) overbuild by major tech companies.
Despite these challenges, Itau BBA expresses increasing confidence in Nvidia’s earnings performance for the next two to three quarters.
They believe that the Blackwell delay, contrary to popular opinion, may actually serve as a tailwind for short-term numbers, particularly with the H200 chip proving more accretive than the B100 or B200 models.
However, the analysts also highlight potential risks to Nvidia’s implied growth in calendar year 2026 (CY26). “To command a 30x P/E CY25, we believe that NVDA should have a CY26 EPS growth of at least 20%,” writes Itau BBA.
A capex exercise based on Microsoft (NASDAQ:MSFT)’s spending suggests that if Nvidia continues to grow at these levels, Microsoft’s capex could reach 100% of its cash flow from operations or EBIT by FY26, raising concerns about sustainability.
To alleviate these concerns, the analysts point to the importance of faster AI adoption. They cite Microsoft’s bullish tone in a recent earnings call, where a mass rollout of M365 Copilot was highlighted as a potential driver for increased AI infrastructure investment, which could benefit Nvidia.
“All-in, we continue to see NVDA delivering a USD5-6 EPS in CY25. However, we believe that we could see a semi infrastructure digestion at some point in CY26, adds the firm.
Itau BBA currently maintains its Outperform rating on the stock, explaining that its EPS projection could result in a fair price range of $150 to $180 a share for NVDA (based on a 30x P/E ratio).
