Goldman Sachs Shares Insights on Nvidia Stock Amid Growing ‘Circular Revenue’ Debate – Discover What It Means for Investors!

Nvidia (NASDAQ: NVDA) recently made headlines with a groundbreaking deal involving OpenAI. However, the buzz isn’t just about that partnership; another major agreement with AMD is also turning heads. Investors are now contemplating how these strategic moves might impact Nvidia’s future, particularly in the growing world of AI.

Goldman Sachs analyst James Schneider recently shared insights about OpenAI’s plans for infrastructure. They aim to build their own data centers using Nvidia GPUs and explore partnerships with major players like Oracle. Schneider predicts that to fund these projects, OpenAI may need to secure as much as $75 billion by 2026. This comes on the heels of Oracle raising $18 billion to support OpenAI—an indication that these collaborations are gaining traction.

But what does this mean for Nvidia? Schneider believes that the company stands to benefit from a “circular revenue” model. This means that Nvidia’s investments in AI startups could lead to more sales of their GPUs. However, investors may closely monitor these relationships, as they involve a dual role—not just as customers but also as stakeholders.

When a supplier invests in a customer, it raises questions about the sustainability of that customer. Analysts suggest that this dual role warrants a cautious approach. Schneider views Nvidia’s investments as vital for fostering the overall AI ecosystem, particularly by promoting the use of its CUDA software platform.

Nvidia’s current fundamentals remain strong, with growth driven by major tech players known as hyperscalers. While Schneider is optimistic about Nvidia’s stock, predicting a price bump from $200 to $210 in the next year, he remains cautious about its valuation due to risks from newer, less traditional customers.

On average, analysts project a price target of around $219.86 for Nvidia, suggesting potential returns of about 14% over the next year. Currently, the stock holds a Strong Buy consensus rating based on a mix of 35 Buys, 2 Holds, and 1 Sell.

Overall, Nvidia’s strategic investments may bolster their position in the AI landscape, but the sustainability and profitability of these arrangements will be key factors to watch in the coming months.

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