NVIDIA: Target Price Raised to $190 on Strong Sovereign AI Demand and Significant Network TAM Increase Citi (A. Malik, 25/07/07) Citi has raised NVIDIA's target price from $180 to $190, based on a significant upward revision of the AI accelerator and networking Total Addressable Market (TAM). This revision is driven by strengthening sovereign AI demand, the scaling up of AI training clusters, and the expansion of network connectivity. Concurrently, the Blackwell product line is progressing smoothly, and the trend of improving gross margins continues. Data Center Semiconductor TAM Raised to $563 Billion, Network Contribution Growing Most Significantly Citi projects the AI TAM for data center semiconductors to reach $563 billion by 2028, a 13% increase from previous forecasts. Within this, the GPU and custom ASIC market is expected to grow by 4%, primarily driven by better-than-expected sovereign AI projects. The networking TAM has been significantly revised upwards from $90 billion to $119 billion, a 32% increase, propelled by larger-scale AI clusters and amplified enterprise internal network demand. Networking's share of the overall TAM is projected to increase to 21%. FY27/FY28 Sales and Earnings Forecasts Upwardly Revised, Networking Growth Particularly Prominent Citi has raised NVIDIA's FY27/FY28 data center revenue forecasts by +5% and +11% respectively. Networking sales forecasts have been raised by +12% and +27%, and are expected to account for approximately 20% of total data center revenue. Earnings per share (EPS) forecasts have increased by 6% and 21% for FY27 and FY28, respectively. The networking business is projected to grow by 112% in FY27, becoming the second growth engine driven by the opening of the NVLink platform and the expansion of AI switches. Blackwell Shipments Exceed Expectations, GB300 Expected to Maintain Smooth Delivery Pace GB200 shipments are accelerating, and Citi believes that previous concerns about supply chain bottlenecks have largely been resolved. The company is well-positioned to smoothly transition to the GB300 product leveraging its experience from the Hopper to B200 transition. NVIDIA plays a core role in multiple sovereign AI projects, and sovereign AI deployments are expected to reach tens of GW scale in the coming years, further enhancing long-term revenue certainty. Gross Margin Rebounds to Mid-to-High Levels, Export Restriction Risks Limited The gross margin is expected to rebound to over 70% in FY25, primarily benefiting from the mass production progress of Blackwell GB200. Although some countries (e.g., Malaysia, Thailand) may face future export regulations, Citi believes NVIDIA possesses tracking mechanisms to control risk and considers the impact of China export bans to be largely reflected in current expectations. AI Accelerators to Grow at 22% CAGR, GPUs Still Dominate the Market Between 2025 and 2028, the overall AI accelerator Compound Annual Growth Rate (CAGR) is projected to be 22%. GPUs are expected to grow at 16% annually, while ASICs are projected to grow at 32%. However, GPU prices are significantly higher than ASICs (3 to 8 times higher). By 2028, GPU and ASIC sales are expected to reach $338 billion and $59 billion, respectively, totaling $396 billion, accounting for over 85% of the accelerator TAM. NVIDIA's technological leadership and strong user base advantages remain central to its market share. $NVDA