TLDR
- Nvidia stock rose 2.1% Thursday on positive analyst coverage and manufacturing partner results
- RBC Capital Markets launched coverage with Outperform rating and $240 target price
- Taiwan Semiconductor plans $56 billion in capital spending for 2026 versus $41 billion in 2025
- AI accelerator market share expected to slip from 80% to 70% by 2027 as rivals advance
- Analyst projects hyperscaler capital spending remains elevated through at least mid-2027
Nvidia (NVDA) shares gained 2.1% Thursday, closing at $186.92 following encouraging developments on multiple fronts. The stock extended gains in after-hours trading, adding 0.4% to reach $187.72.
RBC Capital Markets analyst Srini Pajjuri kicked off coverage with an Outperform rating. His $240 price target indicates 28% upside from current levels. The positive call comes after Nvidia traded flat for three months while investors questioned its market position.
Taiwan Semiconductor Manufacturing posted fourth-quarter results that exceeded expectations. Net profit surged 35% compared to the year-ago period. The company’s capital spending forecast drew more focus than quarterly performance.
TSMC plans to deploy up to $56 billion in capital investments throughout 2026. That marks a substantial jump from $41 billion spent in 2025. The figure came in well above Wall Street estimates. Such aggressive spending signals strong confidence in future demand.
TSMC produces Nvidia’s graphics processing units using state-of-the-art manufacturing technology. The record capital commitment suggests TSMC sees robust order flow continuing. Supply constraints remain the primary factor limiting Nvidia’s revenue growth.
Competitive Landscape Shifts
Nvidia holds roughly 80% of the AI accelerator market today. RBC projects that share declining to 70% over the next two years. Advanced Micro Devices and Google’s proprietary chips are gaining traction.
Corporate buyers seek to reduce dependence on a single supplier. Google’s Gemini platform has shown improving performance lately. AMD continues pushing competitive products into customer environments.
Pajjuri doesn’t see the share loss as problematic. He emphasizes Nvidia’s performance edge and complete product ecosystem as defensive moats. The company’s rackscale deployment expertise appeals to data center operators.
Nvidia’s Rubin architecture is now shipping to customers. These next-generation systems maintain the performance gap versus alternatives. The Groq development timeline provides additional strategic options.
Spending Outlook Stays Strong
The analyst expects top-tier cloud providers to maintain high capital spending into 2027. The biggest hyperscalers have financial resources supporting continued buildouts. Competition for AI leadership drives sustained infrastructure investment.
Some observers have questioned circular financing deals in the industry. Pajjuri believes these companies remain committed to spending plans. Balance sheet strength enables ongoing capacity expansion.
Investor focus has rotated toward memory chip stocks recently. Nvidia hasn’t been the primary AI investment theme in recent months. The sideways price action reflects this sentiment rotation.
Worries about peaking AI infrastructure spending have surfaced periodically. TSMC’s spending plan challenges that narrative. A 37% year-over-year increase demonstrates clear demand visibility. Foundries don’t commit such capital without solid customer commitments.
Technical Position Improves
Nvidia’s 52-week trading range spans $86.62 to $212.19. The company’s market value stands at $4.5 trillion. Thursday’s volume reached 8.3 million shares compared to a 183-million average.
Rubin platform availability represents a competitive milestone. These systems deliver meaningful performance gains over prior architectures. Integrated hardware and software solutions create customer retention advantages.
Cloud provider rivalry intensifies as AI capabilities become strategic differentiators. Deep-pocketed technology companies show little inclination to reduce spending. Financial capacity supports infrastructure investment regardless of broader economic concerns.
RBC’s coverage initiation provides fresh validation after months of sideways trading. The $240 target represents conviction that execution will drive valuation higher. TSMC’s spending commitment reinforces the demand picture.
