Nvidia (NVDA) Stock: Why One Analyst Sees Perfect Buying Opportunity Right Now

TLDR

• RBC Capital Markets initiated coverage on Nvidia with an Outperform rating and $240 price target, up 28% from current levels
• Nvidia’s market share in AI accelerators expected to drop from 80% to 70% by 2027 as competitors gain ground
• Taiwan Semiconductor announced plans to spend up to $56 billion in capital expenditures for 2026, up from $41 billion in 2025
• RBC analyst expects elevated capital spending from major tech companies to continue for 12-18 months
• Nvidia stock rose 2.1% during trading and an additional 0.4% in after-hours following TSMC’s earnings report

Nvidia (NVDA) stock climbed 2.1% Thursday after receiving a vote of confidence from RBC Capital Markets and strong signals from its manufacturing partner. The chip maker has traded sideways over the past three months as investors questioned its dominance in the AI chip market.

NVIDIA Corporation, NVDA

RBC Capital Markets analyst Srini Pajjuri initiated coverage with an Outperform rating and $240 price target. The target represents a 28% upside from current levels around $187. Pajjuri believes the chip maker will regain momentum despite growing competition.

The stock got an extra boost from Taiwan Semiconductor Manufacturing’s quarterly results. TSMC reported net profit jumped 35% in the fourth quarter. The company announced plans to spend up to $56 billion on capital expenditures in 2026.

That spending level far exceeds the $41 billion TSMC invested in 2025. It also came in well above analyst expectations. The massive capital commitment signals strong demand for advanced chip manufacturing capacity.

TSMC manufactures Nvidia’s high-performance GPUs using advanced semiconductor fabrication technology. The elevated spending suggests TSMC expects continued strong orders from Nvidia. Manufacturing capacity remains the primary constraint on Nvidia’s ability to meet customer demand.

Market Share Pressure Builds

Nvidia currently holds roughly 80% of the AI accelerator market. That share is projected to decline to 70% by 2027. Competitors like Advanced Micro Devices and Google’s Tensor Processing Units are gaining ground.

Customers are actively seeking to diversify their chip suppliers. Google’s Gemini platform has shown renewed strength. AMD continues developing its own AI chip offerings to challenge Nvidia’s dominance.

Pajjuri doesn’t view the market share decline as a major concern. He cited Nvidia’s performance advantages and comprehensive product offerings as protective factors. The company’s rackscale expertise gives it an edge in data center deployments.

Nvidia’s Rubin systems are already in production. These next-generation platforms should help maintain the company’s technical lead. The Groq roadmap provides additional flexibility for future product development.

Spending Remains Strong

RBC expects capital spending from major tech companies to stay elevated for 12 to 18 months. The Big 4 hyperscalers have strong balance sheets to fund continued infrastructure investments. Competition among these cloud providers drives sustained spending on AI compute capacity.

Some concerns exist about circular financing deals in the industry. However, Pajjuri believes hyperscale companies remain highly motivated to invest. Their financial strength supports continued infrastructure buildouts.

Investor focus has shifted somewhat toward memory products in recent months. Nvidia hasn’t been the primary AI play on investors’ minds lately. The sideways trading pattern reflects this cooling sentiment.

TSMC’s capital spending announcement provided fresh evidence that AI infrastructure expansion continues. The 37% year-over-year increase in planned spending suggests robust demand visibility. Manufacturing partners don’t commit that level of capital without strong signals from customers.

Nvidia shares traded at $186.92 at the close of regular trading Thursday. The stock added another $0.72 in after-hours trading to reach $187.72.

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