AI has been generating headlines and hype, and for good reason. It’s the once-in-a-generation technology that is in the process of permanently altering the tech landscape.
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From an investor’s perspective, the key point is how we quantify the AI boom. In 2023, the AI market was valued at $174.3 billion, and it’s expected to reach $2.09 trillion by 2033, for a compound annual growth rate (CAGR) of approximately 30%.
The factors likely to fuel the AI expansion include increasing smartphone use, a favorable government/policy environment, an expanded information and communications segment, and the increased use of automation in everything from the factory floor to the car in your driveway.
With a growing number of players scrambling for a slice of this ever-expanding pie, investors are looking to the experts for guidance. Enter Barclays analysts, who are putting two AI stalwarts – Nvidia (NASDAQ:NVDA) and Super Micro Computer (NASDAQ:SMCI) – under the microscope. Let’s take a closer look at their findings.
Nvidia
The first AI stock we’ll look at is Nvidia, a company that has definitely gained a great deal of notoriety recently – and for the right reasons. To start with, Nvidia’s stock has been rocketing upwards over the past few years, the sharp rise in share price propelling Nvidia right to the top of the Wall Street rankings; the company’s $3.05 trillion market cap makes it the second-largest publicly traded firm on Wall Street, behind only Apple.
Nvidia has reached this heady level of success by becoming the market leader in the semiconductor chip industry. All of our digital applications, from electronic calculators to laptop computers to AI data centers, run on semiconductor chips – and Nvidia is a leading designer and distributor of AI-capable chips, chipsets, and accelerators. The company took an early lead in the field of high-speed computing when it invented the first GPUs in the late ‘90s – and saw the chips rapidly find applications in fields well outside of their original gaming niche. Today, Nvidia’s chips are in high demand, and are especially sought after by AI developers and data center operators. Nvidia derives the lion’s share of its revenue today from the data center segment, which is closely tied to the AI field. When it comes to AI-capable semiconductor chips, Nvidia commands about 80% of the market.
The company’s success in meeting the growing demand for AI-capable semiconductor chips is reflected in its earnings. In its fiscal 4Q25 report, the most recently released, the company reported total revenue of $39.3 billion, up 12% from the prior quarter, an impressive 78% year-over-year, and beat the forecast by $1.17 billion. The strong beat was driven by the company’s data center revenue, which came in at $35.6 billion, for a 93% year-over-year gain. Both the total revenue and data center revenue were company quarterly records. At the bottom line, Nvidia realized a non-GAAP EPS of $0.89. This figure was up 71% year-over-year, and beat the forecast by 4 cents per share.
Management guided toward fiscal 1Q26 revenue of $43 billion, which would translate to a year-over-year increase of approximately 65%. The problem for Nvidia, however, is that it has set the bar so high, that the outlook – while ahead of expectations – wasn’t as strong as some expected.
Barclays analyst Tom O’Malley is among those a tad disappointed. That said, he is quick to point out Nvidia’s success has set expectations at a high level. He remains upbeat on the stock, and writes, “From a top line perspective numbers came in a bit lighter than what we thought for April, but this was always the biggest quarter of risk in our eyes. Blackwell upside in Jan combined with H200 growth means a big step down in H100 and the company is pointing to a crossover for Blackwell in April… In all, NVDA has earned a very high bar and wasn’t able to deliver on its usual beat/raise cadence, but we think the company is executing smoothly through the product transition and now trades in the low 20x fwd P/E with the biggest risk to this year accounted for.”
O’Malley gives NVDA shares an Overweight (i.e., Buy) rating, with a $175 price target that points toward an upside potential of 40% on the one-year horizon. (To watch O’Malley’s track record, click here)
Nvidia’s stock has picked up 41 recent analyst reviews, with a 38 to 3 split that favors Buy over Hold and gives the stock its Strong Buy consensus rating. The shares are currently priced at $124.92, and the average price target of $178.66 is slightly more bullish than the Barclays view, suggesting a 43% bump in the coming year. (See NVDA stock forecast)
Super Micro Computer
The second stock on our list, Super Micro Computer, is a long-time leader in the design and construction of advanced, high-performance computer solutions – and in recent years, has become a major player in the development of AI-capable hardware.
The company is a specialist in AI servers and direct liquid cooling (DLC) and operates an extensive global manufacturing footprint, via which it provides the computing infrastructure that supports data center operations and advanced AI applications.
We should note here that Super Micro’s stock has been falling off in recent months, from the peak values it reached in March of last year. The company has faced a U.S. Department of Justice investigation, looking into alleged accounting violations. During that investigation, the company fell out of compliance with its regulatory filings per NASDAQ listing rules. However, in a press release dated February 25, Super Micro announced that it had received a notification letter from NASDAQ recognizing that the company is now back in compliance with the index’s listing rules.
In accordance with that, the company has also announced that it has filed its SEC regulatory paperwork and financial releases for both Q1 and Q2 of fiscal 2025. Looking at the second-quarter results, we find that the company had revenues of $5.68 billion, nearly $28 million better than had been expected, and saw bottom-line earnings of 51 cents per share, two cents over the estimates.
In his coverage of Super Micro Computer, Barclays’ George Wang gives full credence to both the positives and negatives of the company, pointing out its strong position in the high-performance computer hardware market and its restoration of NASDAQ compliance – but at the end, Wang cannot take an unequivocally positive stance. He writes of the company, “While we recognize SMCI’s leadership position in AI server and direct liquid cooling (DLC) as we expect it would be among the first to ship B200 HGX servers in March-Q, we believe that its competitive moat is shrinking and its checkered past could limit the P/E multiples investors are willing to pay for the stock. We therefore remain on the sidelines despite SMCI now being compliant with its filings, which should help with business fundamentals, such as incremental order wins from customers who were previously hesitant. However, we think that SMCI is still subject to future risks from financial controls and ongoing overhang of potential capital raises to fund the working capital needs for Blackwell purchases.”
In line with those comments, Wang rates SMCI stock as Equal Weight (i.e., Hold) although it should be noted that his price target of $59 implies a 12-month share appreciation of 42%. (To watch Wang’s track record, click here)
Turning now to the rest of the Street, where the stock has a Hold consensus rating, based on 9 analyst reviews that include 3 to Buy, 4 to Hold, and 2 to Sell. The shares have a trading price of $41.46 and an average price target of $45.75, together indicating potential for a 10% upside by this time next year. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
