Nvidia stock rises on AI spending, chip deal ahead of earnings

Nvidia (NVDA) stock rose more than 4% on Tuesday following bullish notes from Wall Street analysts citing strong chip demand ahead of its earnings report set for Wednesday afternoon.

In a client note this week, Stifel (SF) analyst Ruben Roy raised his price target on Nvidia to $180 from $165, while Truist Securities' (TFC) William Stein raised his price outlook to $167 from $148.

Roy cited "a diverse set of data points" including continued high spending on AI infrastructure by hyperscalers and demand for Nvidia's latest Blackwell AI chips.

"We believe that NVDA is well positioned in markets that combine to yield an overall TAM [total addressable market, or revenue opportunity] of more than $100 billion exiting 2025 and a longer-term opportunity funnel that could approach $1 trillion,” Roy wrote.

Nvidia stock also rose on news that one of its customers, cloud provider Nebius Group (NBIS), is launching its first GPU cluster in the US, which will use up to 35,000 Nvidia chips. A GPU cluster is a network of graphics processing units, or AI chips, with massive compute power used to train and run artificial intelligence software.

For reference, Nebius' order of 35,000 Nvidia chips is equivalent to about 4% of the volume of Hopper AI chips Wall Street analysts expect Nvidia to have shipped in the October period, Bloomberg consensus data shows.

Nvidia declined to comment on the deal.

Nvidia stock’s climb comes a day after shares fell on a report by the Information about overheating issues with its Blackwell AI servers. Nvidia in August was reportedly dealing with design flaws related to the individual Blackwell chips themselves, which prompted the company to push back the AI chips' production ramp to the January quarter.

Nvidia has not confirmed overheating issues with its Blackwell servers, and the company told Yahoo Finance Monday: "The engineering iterations are normal and expected."

Truist Securities’ William Stein said of the overheating issues reported this week, “Conversations with our industry contacts don't precisely corroborate this latest data point, but they do reflect supply chain challenges around the production ramp.”

Despite reported Blackwell issues, Dell Technologies (DELL) said it has already shipped its latest AI hardware product, the PowerEdge system, with Nvidia’s latest GB200 NVL72 systems.

“[C]ommentary from NVDA, partners, and our industry contacts feel overwhelmingly positive,” Stein wrote in a note to investors. He pointed to emerging demand for Nvidia chips in the robotics and “traditional” computing sectors as well as that from AI software developers.