Melius Raises NVIDIA Price Target to $420

Melius analyst Ben Reitzes raised the price target on NVIDIA (NASDAQ: NVDA) to $420 (from $400) while maintaining a Buy rating.

“The big fear was that Nvidia’s vaunted 75% gross margin would be cut due to memory and other constraints.

Well, it was – but it was packaged with a big revenue guide for next year for 70%+ growth that could help shares finally power higher.

In fact, the scenario we recently wrote about of EPS power hitting $23 at a $1T revenue run rate looks likely to occur in F2H29 now – and that will be a constrained figure.

We also thought the buyback communication around returning all excess cash outside of strategic purchases means the buyback figure gets markedly bigger next year too, with over 60% of FCF going toward shareholder return.

Lost in it all was reporting accelerating growth for the 4th straight quarter and a great announcement with AWS (who most think of as a chip rival) that validates the demand for Nvidia instances.

We would note that purchase commitments soared to $279B from $119B (up 134% q/q) that represents 10 quarters of COGS at the F3Q27 run rate, largely to reflect memory needs (NVDA’s total commitments are even higher at $366B).

A company growing its demand over 100% y/y at this scale through next year sure doesn’t seem to be losing any meaningful share.

Nvidia is just too cheap for a 70%+ grower no matter what you may think of its investing strategy (which is arguably the envy of every VC and hedge fund in Silicon Valley).

The gross margin guide down may be a blessing particularly as investors are likely to believe it is de-risked at least for a while.

The revenue guide, while powered a bit by pricing, is still so much better than consensus that EPS power of $20+ could be demonstrated well within 2 years.

We remain confident in the prospects for the AI buildout and Nvidia realizing 50%+ share of a $2T+ TAM well before 2030. We raise estimates materially and reiterate Buy Rating.

Target moves to $420 from $400 now reflecting 20x our new FY29 EPS estimate of $21.11.”

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