RBC Initiates Nvidia (NVDA) at Outperform, Cites $500B+ AI Backlog and Ecosystem Dominance

NVIDIA Corporation (NASDAQ:NVDA) is one of the AI Stocks Making Waves on Wall Street. On January 14, RBC Capital analyst Srini Pajjuri initiated coverage on the stock with an “Outperform” rating and a price target of $240. He sees robust AI demand for Nvidia, a backlog exceeding $500 billion, and ecosystem dominance.

The analyst said key investor debates around Nvidia center around the sustainability of AI infrastructure spending and rising competition. They anticipate cloud capital expenditure to remain elevated over the next 12-18 months, particularly among the Big 4, well-capitalized, hyperscalers.

This outlook is further supported by Nvidia’s $500+ billion backlog, accelerating inferencing demand, and enterprise AI adoption. Any slowdown is anticipated to be gradual, with sovereign projects and China demand seen to provide offsets.

While competition exists, Nvidia’s leadership and ecosystem dominance have led analysts to be less concerned.

"We are not overly concerned about competition given NVDA's full-stack performance leadership and ecosystem dominance. B/S strength is an added advantage and valuation looks compelling at ~20% discount to both Semi peers/Mag7. Initiate at Outperform."

NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.

While we acknowledge the potential of NVDA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.