Nvidia's Future at Stake: Wall Street Evaluates Company Strategy

Author: Kelly Martin Updated: 10-06-2025 07:12 AM

Goldman Sachs Issues Caution on Nvidia's Growth

Concerns have emerged surrounding Nvidia Corp. (NASDAQ: NVDA) as Goldman Sachs raises its price target for the semiconductor leader to $210 from $200. This comes with a caveat about potential "circular revenue" risks, which could affect Nvidia's financial stability.

Understanding Circular Revenue Risks

The term "circular revenue" refers to a situation where Nvidia, in its role as a supplier, also invests equity in its customers. This dual relationship could lead to risks that challenge Nvidia's business model. Goldman Sachs emphasizes the need for increased scrutiny in this area due to the potential for dilutive effects on Nvidia's earnings multiple.

Barclays Takes a Conservative Approach

In another perspective, Barclays provided a more tempered forecast on Nvidia's revenue potential. CEO Jensen Huang's ambitious projections, often referred to as "Jensen’s Math," face challenges from Barclays' more conservative estimates of revenue generated from AI factories.

The Reality of AI Factory Revenue Projections

Huang has projected that a one-gigawatt (GW) AI factory could bring in an impressive $40 billion to $50 billion in "compute cost" revenue. However, Barclays' own analysis offers a lower expectation, estimating revenue between $32.5 billion to $42 billion per GW. This disparity highlights the challenges Nvidia faces in meeting ambitious targets.

Nvidia Remains an Attractive Option Despite Concerns

Despite the cautious outlook from Barclays, which has now set a price target of $240 for NVDA, analysts still view Nvidia as a standout player in the technological landscape. Barclays acknowledges the vast opportunities available but cautions investors to consider a more grounded perspective when evaluating Nvidia's potential.

The Current Stock Landscape

As market fluctuations occur, shares of NVDA recently dipped by 0.70%, closing at $187.62, before gaining 1.16% in premarket trading. Over the year, the stock has experienced a significant increase of 46.90%, demonstrating its resilience in a volatile market.

Comparative Performance with ETFs

In the broader market, related funds like the Invesco QQQ Trust ETF (NASDAQ: QQQ) and the SPDR S&P 500 ETF Trust (NYSE: SPY) have shown gains in premarket trading as well. The QQQ rose by 0.45% to $605.87, while the SPY increased by 0.26% to $670.98. This uptick reflects a positive sentiment in tech stocks linked to AI advancements.

Frequently Asked Questions

What is the concern regarding circular revenue for Nvidia?

Circular revenue refers to Nvidia's investments in its customers, which can complicate revenue clarity and impact earnings ratios.

How did Goldman Sachs adjust Nvidia's price target?

Goldman Sachs increased its price target for Nvidia from $200 to $210, maintaining a Buy rating despite caution around revenue risks.

What is Barclays' perspective on Jensen's Math?

Barclays has pushed back against Jensen Huang's revenue estimates, suggesting a more conservative range for AI factory revenues.

How have Nvidia's stock prices fluctuated recently?

Nvidia's stock has seen a slight decline recently but has shown overall growth of 46.90% over the past year, with recent pre-market activity indicating upward momentum.

What is the outlook for Nvidia in the AI market?

Despite challenges indicated by analysts, Nvidia remains highly regarded in discussions about the future of AI, highlighting significant market opportunities.

About The Author

Hello Kelly Martin here, a financial and publicly traded company specialist committed to writing with clarity and sage advice. Having a wealth of experience and a thorough grasp of corporate dynamics and the financial environment, my main goal in writing blog posts and articles is to provide insightful analysis together with useful guidance. My objective is to arm readers with the information they need to comprehend the complexities of publicly traded companies and make wise financial decisions.

Writing for several financial blogs has let me interact with a wide range of readers, from novice investors to seasoned pros looking for fresh perspectives. My goal is to make corporate analysis and finance understandable and interesting so you may confidently negotiate the intricacies of the financial world. I appreciate you traveling with me toward success and financial literacy.

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