Citi is expecting Nvidia ‘s margins to bottom out early next year as its Blackwell platform will take time to fully ramp up. Analyst Atif Malik maintained his buy rating on the artificial intelligence darling. He also kept his $150 price target, which suggests shares can jump 17.4%. This year, Nvidia has soared nearly 158%. “While we are bullish on another strong +40% Y/Y cloud data center capex growth next year, we expect the stock to likely remain range bound through CES Jan before Blackwell driven Y/Y sales and gross margin inflection in the [April quarter],” Malik wrote in a Monday note to clients. “Fundamentally, we believe AI adoption remains in 3rd/4th innings as enterprise AI demand takes off next with AI agents.” Malik expects Nvidia’s gross margins to be in the low 70s range, or roughly 72%, in the first quarter of next year, with long-term gross margins stabilizing in at a mid-70s percentage with the Blackwell graphics processing unit, or GPU. Nvidia is expected to ramp up Blackwell production in the fourth quarter of this year, with production continuing into fiscal 2026. But long-term, Nvidia has a strong investment case, according to the analyst. He explained that enterprise clients don’t want to be tied to a single cloud system. Instead, they will likely prefer to write their applications once with Nvidia’s GPUs and have them transferable across clouds. “NVDA’s large installed base is a strong pull for developers who aim to have the largest possible adoption of their applications,” Malik said. And while Nvidia has already emphasized the return on investment that its products deliver for major consumer internet companies in markets such as social media, e-commerce and search, Malik believes generative AI will continue to create disruptive business models. “We expect to see positive ROI data points next year led by GPU as a service providers,” he said.
