NVIDIA Corp. (NVDA) sits right at the center of the AI infrastructure boom, but two prominent market watchers argue investors are still missing parts of the story. The company's strategy is more than just selling chips, and its long-term earnings potential might be bigger than the current stock price suggests.
Jim Cramer, the "Mad Money" host, thinks NVIDIA's stock doesn't fully reflect its AI growth, profitability, or its expanding role in financing data center projects. Meanwhile, Ben Reitzes, head of research at Melius, sees NVIDIA's open-model strategy and physical AI as potential drivers of its next phase of growth.
Cramer Says NVIDIA Should Bet Bigger On Its Own Stock
Cramer is on board with NVIDIA's decision to provide financial backing for AI infrastructure companies that might struggle to get multibillion-dollar loans from traditional banks. He told CNBC on Wednesday that NVIDIA effectively acts as a banker for the AI data center buildout, and it benefits from its deep understanding of GPUs and their residual value.
However, Cramer believes complicated arrangements involving companies like Anthropic, Lambda, and Hut 8 Corp. (HUT) make NVIDIA's strategy harder for Wall Street to appreciate. These deals are not your typical lending arrangements, and that complexity might be clouding the investment thesis.
He called NVIDIA "radically cheap" at 23 times this year's earnings estimates. To fix that, he argued the company should follow Apple Inc.'s (AAPL) example and dramatically expand share repurchases. Cramer proposed a $500 billion buyback targeting roughly 10% of NVIDIA, saying, "Right now, I believe there's no better investment for NVIDIA than NVIDIA."
His argument centers on valuation. Cramer believes NVIDIA can continue funding AI investments while using its cash generation to address what he sees as Wall Street's undervaluation of the company. In other words, NVIDIA has the money to do both, so why not?
Reitzes Sees Open Models And Physical AI Driving Growth
Reitzes remains bullish on NVIDIA, maintaining a Buy rating and raising his price forecast to $420 following the company's latest earnings. He told CNBC on Tuesday that NVIDIA reduced uncertainty around gross margins for the next six quarters, providing greater visibility than most semiconductor and hardware companies.
But Reitzes sees an even bigger opportunity in NVIDIA promoting open and open-weight AI models that perform best on its computing platform. He described the approach as a "razor-and-blade strategy," with NVIDIA giving away models while creating demand for its chips, software, and infrastructure. Give away the razor, sell the blades.
Reitzes expects physical AI and enterprise applications to require growing numbers of customized models, which could strengthen NVIDIA's broader ecosystem. He also believes the availability of open models will push Anthropic and OpenAI to continue investing heavily to remain at the AI frontier. That competitive cycle should support continued infrastructure spending, and Reitzes said physical AI could "explode," driving additional demand for NVIDIA's technology.
Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price forecast of $349.15. Recent analyst moves include:
- Citigroup: Buy (Raises Forecast to $315.00) (Aug. 27)
- Mizuho: Outperform (Raises Forecast to $315.00) (Aug. 27)
- JP Morgan: Overweight (Raises Forecast to $320.00) (Aug. 27)
NVIDIA Top ETF Exposure
- Franklin Focused Dynamic Growth ETF (FFOG): 9.73% Weight
- First Trust Innovation Leaders ETF (ILDR): 9.79% Weight
- Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ): 9.94% Weight
Significance: Because NVDA carries such a heavy weight in these funds, significant inflows or outflows will likely force automatic buying or selling of the stock. That's something to keep in mind if you're watching the price action.
NVIDIA Price Action
NVDA Stock Price Activity: NVIDIA shares were down 0.06% at $217.32 during premarket trading on Wednesday, according to market data.
