Citi Lowers Nvidia Price Target Amid AI Chip Spending Concerns: What Traders Should Know

In a recent market revelation, Citi has revised its price target for Nvidia (NASDAQ: NVDA), dropping it from $163 to $150 per share. This adjustment comes as analysts express concerns over decreased spending on AI chips from major hyperscalers, which could act as a drag on the tech powerhouse's stock performance.

The bank has maintained a 'buy' rating on Nvidia, suggesting there’s still a significant upside potential of 39% from the new target price. Nevertheless, the downgrading of sales forecasts for graphic processing units (GPUs) is something traders should watch closely. Specifically, Citi has adjusted its projections for GPU sales downward by 3% for 2025 and 5% for 2026, anticipating a slowdown in capital expenditures from giants like Microsoft (NASDAQ: MSFT), which has reportedly begun to cut back on its data center investments.

Analyst Atif Malik underscored that this revision stems from a trend where key players in cloud computing are tightening their belts. He noted, “Our revised outlook is based on our expectations that MSFT's FY26 capex will likely contract, instead of grow.” The broader implications of this shift could lead to a cascading effect on Nvidia's sales, particularly as rising trade tensions and tariffs loom overhead. Malik pointed out that these tariffs could moderately squeeze Nvidia's profit margins.

Furthermore, the current geopolitical climate, marked by ongoing trade disputes, adds a layer of uncertainty for enterprise investments. As such, there's a heightened risk of a slowdown in demand, which could hinder Nvidia's recovery. In 2025 alone, the company's stock has experienced a decline of nearly 20%, mirroring a broader tech sector downturn where the S&P 500 technology segment has fallen over 17% year-to-date.

For traders, the message is clear: while Nvidia continues to develop leading-edge technology, external factors such as changing corporate spending patterns and trade policies could influence its stock trajectory. Keeping a close eye on market conditions and corporate announcements will be crucial for making informed trading decisions in the coming months.