Raymond James Maintains Nvidia’s Strong Buy Rating

Raymond James analyst Simon Leopold reiterated on January 6, 2026, a ‘Strong Buy’ rating and $272 price target on Nvidia.

“Nvidia kicked off the Consumer Electronic Show (CES) in Las Vegas with Jensen Huang’s keynote.

While there were no big reveals, the commentary offered encouragement regarding Nvidia’s leadership and the overall AI market.

Huang described demand as “really good,” but offered no quantification.

● Commentary emphasized strong demand, but shed no light on the Nvidia’s ability to meet it.

Strong results from Hon Hai, a key Nvidia partner, reported December monthly sales up 32% y/y, ahead of expectations and supportive of upside to Nvidia.

Investors are concerned about memory chip supply constraints; management noted that they have been planning the supply chain with partners for ~2 years, which implies that Nvidia has secured what it needs.

Nvidia also emphasized the value of its full-stack approach, particularly its investments in the software stack, which we regard as a pilar of its competitiveness.

● The Vera Rubin platform is now in full production.

Although the initial commentary may have suggested the platform would reach the market early, management confirmed that first revenue is still expected in 2H26.

Our model conservatively reflects first Rubin revenue in the January 2027 quarter.

○ Rubin offers massive productivity gains (e.g., tokens per watt), which should lead to rapid adoption. It has 5x the computing power vs. Blackwell (the current generation) with less than 2x the number of transistors.

○ Rubin racks are simpler to build than Blackwell.

The architecture features fewer cables and hoses, which should simplify manufacturing and deployment for the supply chain.

○ The Rubin rack systems will feature Co-Packaged Optics (CPO) with 200G per lane for the scale across rack to rack connections but still employs copper (using 400G SerDes) for scale up within the racks.

We believe Lumentum is supplying lasers into the CPO and Coherent is pursuing laser qualification.

Lasers are among the higher ASP elements of CPO, but may account for 40-60% of the optical BoM.

— Physical AI, which refers to artificial intelligence systems that perceive, reason, and act in the physical world, not just in digital spaces, was a focus.

The keynote highlighted progress with self-driving cars, but the topic can include robots for applications ranging from industrial to surgical.

The topic represents an element that makes AI adoption a secular trend extending into the next decade.

— We envision upside from China, but Nvidia offered no new updates on the prospect.

Management noted that its supply chain is prepared to meet demand from China without disrupting sales to other customers.

— Management offered clarification regarding its DGX Cloud strategy.

The intent was never to compete with customers, but rather to provide a demonstration of Nvidia’s versatility and encourage adoption.

The DGX Cloud offering runs in multiple public clouds (e.g., AWS, Azure, etc.) This was different from our perception, and we suspect the views of most investors.”

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