On Monday, NVIDIA Corporation (NASDAQ:NVDA) shares experienced a price target adjustment by Barclays (LON:BARC), following the company's 10-1 stock split which took effect after the market closed on Friday. The new price target has been set at $145, a significant change from the previous $1,200. This adjustment also maintains the firm's Overweight rating on the stock.
The stock split necessitated a revision of the share count and the resulting earnings per share (EPS), leading to the updated price target. Barclays has also revised upward its revenue expectations for NVIDIA for calendar year 2025/fiscal year 2026 to $157.1 billion.
This increase reflects an anticipated $25 billion in incremental AI product revenue from what is termed the Sovereign AI opportunity, which is expected to accelerate significantly in the next year.
The Barclays analyst noted that the new revenue projections add approximately $0.61 in EPS on a post-split basis. Applying the same 40x price-to-earnings (P/E) multiple to the new EPS estimate of $3.62 for CY25/FY26, the price target of $145 was determined.
This update comes after the firm's analysis in their report last month, titled "ChatGDP: Sizing Sovereign AI," which highlighted the potential growth in the AI sector and NVIDIA's positioning to capitalize on these developments.
Investors and market watchers will likely monitor NVIDIA's performance closely, as the company adapts to market conditions and aims to fulfill the revised revenue and EPS estimates set forth by Barclays. The Overweight rating suggests that Barclays continues to view NVIDIA's stock as a potentially good investment relative to the market or sector.
In other recent news, the United States Department of Justice and the Federal Trade Commission (FTC) are scrutinizing the competitive dynamics within the artificial intelligence (AI) industry, with a particular focus on Nvidia, OpenAI, and Microsoft (NASDAQ:MSFT). This could potentially lead to investigations into these companies' business practices.
In tandem, investors have placed significant short bets against Nvidia, reaching approximately $34 billion, according to S3 Partners. Nvidia's financial performance and market positioning continue to draw attention, largely due to the robust demand for its advanced AI processors.
Nvidia, along with other tech giants like Microsoft, Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Amazon.com (NASDAQ:AMZN), have significantly influenced the S&P 500's total return of over 12% for the year. Nvidia's 147% increase this year has contributed about a third of the index's gain. However, the market's dependence on these dominant players has raised concerns among investors about potential market vulnerability.
The US Justice Department and the FTC have also agreed to launch antitrust investigations into the activities of Microsoft, OpenAI, and Nvidia in the AI sector. The Justice Department will primarily focus on Nvidia, probing potential antitrust law violations.
In contrast, the FTC will examine the conduct of both OpenAI and Microsoft, including Microsoft's significant $13 billion investment in a profit-oriented subsidiary of OpenAI. These developments highlight the increased regulatory attention on the dominance of these companies in the rapidly growing field of AI.
InvestingPro Insights
In light of NVIDIA Corporation's (NASDAQ:NVDA) recent stock split and Barclays' revised price target, InvestingPro data and tips offer further insight into the company's financial health and market performance. NVIDIA boasts a formidable Piotroski Score of 9, indicating strong financial conditions, and analysts are forecasting sales growth in the current year, underscoring the positive outlook shared by Barclays. Additionally, with 37 analysts revising their earnings upwards for the upcoming period, investor confidence in NVIDIA's potential seems to be growing.
Looking at the real-time metrics, NVIDIA's market capitalization stands at an impressive $2970.0B USD, reflecting its substantial market presence. The P/E ratio is currently high at 70.61, suggesting a premium valuation that investors are willing to pay for NVIDIA's growth prospects. Moreover, the company's revenue has seen a staggering growth rate of 208.27% over the last twelve months as of Q1 2025, which aligns with Barclays' optimistic revenue expectations.
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