The brokerage has retained its 'Outperform' rating on Nvidia, raising the target price to $345 from $285. With the stock at $234 on October 2, the new target implies up to 47% upside. The brokerage said that Nvidia's advantage is becoming more relevant as AI moves beyond training and towards increasingly complex inference workloads.
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Why Nvidia's moat is getting broader
Inference is becoming an increasingly important area of focus for Nvidia, with a key concern being that cheaper custom chips could gradually take share from its GPUs. BNP Paribas, however, doesn't buy that argument.
It sees Nvidia's upcoming Vera Rubin platform as evidence that the company is adapting to the next stage of AI. The platform brings together GPUs, CPUs, networking and other components into an integrated rack-scale system designed for agentic AI, where models have to reason through multi-step tasks, call tools and handle longer contexts.
These workloads require more than raw computing power, making memory, networking and the ability to move information quickly across the system increasingly important. BNP Paribas argues that Nvidia’s combination of its CUDA software ecosystem and NVLink hardware architecture could give it an advantage over individual chip competitors.
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The brokerage expects Nvidia to retain at least three-fourths of the AI compute market in dollar terms, even as AMD and custom accelerators from major technology companies gain ground.
More than a GPU story
BNP Paribas' Nvidia thesis also extends beyond accelerators. It sees standalone server CPUs as an incremental opportunity as agentic AI requires more computing for orchestration, tool calling and data processing.Networking is another increasingly important piece of the puzzle. As AI systems scale beyond individual GPUs and into larger racks, the ability to connect and move data between those systems becomes critical. BNP Paribas expects Nvidia's networking business to become a major differentiator as these architectures expand.
The brokerage also expects Nvidia to maintain gross margins above 70% despite intensifying competition. Its valuation framework uses 15 times CY28 earnings, plus cash, to arrive at the $345 target.
For BNP Paribas, the argument is therefore not simply that Nvidia will sell more chips. It is that as AI infrastructure becomes more complicated, owning more of the stack could make Nvidia's position harder, rather than easier, to displace.
Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here
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