Barclays Raises Nvidia Price Target to $200 on Strong Supply Chain Signals and AI Demand

Barclays has significantly raised its price target for Nvidia (NASDAQ: NVDA), lifting it to $200 from $170, amid growing confidence in the chipmaker’s performance for the second half of 2025. The upgrade follows encouraging insights from supply chain checks that suggest stronger-than-expected demand and revenue potential.

In a note published after Nvidia's first-quarter results, Barclays analysts identified approximately $2 billion in potential upside for the company in July alone, compared to current Wall Street projections. As a result, the bank has increased its full-year Compute revenue forecast to $37 billion, up from its previous estimate of $35.6 billion.

Supply Chain Strength and Positive Market Sentiment

Despite Nvidia's next-generation Blackwell chips reaching 30,000 wafers per month in June—below the previously forecast 40,000—Barclays emphasised that utilisation levels remain strong. Feedback from the supply chain has been generally upbeat, indicating positive momentum heading into the second half of the year.

The bank noted that Nvidia's Blackwell Ultra remains on schedule, with mass production expected to commence in Q3 2025.

System Sales Gaining Traction

System sales, which include full hardware solutions powered by Nvidia chips, are showing strong growth. These are projected to contribute around 25% of total revenue in July, rising to nearly 50% by October. This shift in revenue mix supports a stronger long-term outlook for the company as demand for AI and data centre infrastructure expands.

Barclays now projects Nvidia’s Compute revenue to reach $42 billion in Q3 and $48 billion in Q4—both exceeding previous estimates and broader market expectations.

Revised Valuation Based on Upgraded EPS

The upgraded $200 price target is based on a valuation multiple of 29 times Barclays’ updated 2026 non-GAAP earnings per share (EPS) estimate of $6.86, up from a prior estimate of $6.43. This reflects the bank’s growing confidence in Nvidia’s earnings potential, driven by continued AI adoption and robust chip demand.

Barclays maintained its Overweight rating on Nvidia, reflecting a bullish stance on the company’s fundamentals. However, its broader view of the U.S. Semiconductors & Semiconductor Capital Equipment sector remains Neutral, suggesting a selective approach to stock picking within the industry.

Rising Demand for Custom AI Chips

In addition to Nvidia’s momentum, the report also highlighted increasing demand for Amazon’s custom AI chip, Trainium 2. Barclays estimates that Amazon’s supply can currently fulfil about 70% of the over 2 million units in demand, representing roughly $300 million in potential upside for ASIC revenue this year. Some of this revenue, however, may shift into 2026 depending on fulfilment timelines.

Barclays also reported stability in Google's TPU supply, noting that Version 7 (V7) entered production in May. Volumes for the third quarter are expected to increase by 20% quarter-over-quarter, supporting the broader trend of expanding AI infrastructure capacity.

(Sources: investing.com, reuters.com, ChatGPT)