The tech industry continues to be heavily influenced by the advancements in artificial intelligence (AI). In particular, Nvidia is receiving significant attention as an attractive AI investment opportunity. However, analysts at Melius Research suggest that Cisco should also be on investors’ radar.
Nvidia, known for its graphics-processing units that power AI systems, has experienced incredible growth this year, with its stock price more than tripling. This surge doesn’t come as a surprise given the increasing adoption of AI technology.
Recently, Nvidia’s stock has stagnated due to concerns about tighter U.S. restrictions on AI chip exports to China. It was reported that Chinese search company Baidu sought an alternative supplier for AI chips and placed an order with Huawei instead of Nvidia. However, Melius analyst Ben Reitzes assures Nvidia investors that the company will find new buyers for its chips. Furthermore, he expects Nvidia to address the potential redistribution of products initially intended for China to other regions during its upcoming earnings announcement on November 21.
In addition to its chip sales, Nvidia may surprise investors with strong software revenue, which could further bolster confidence in its high valuation. Reitzes highlights the potential of selling over a billion dollars in unbundled software and generating recurring-like revenue from its AI training service called DGX Cloud.
Overall, while Nvidia faces challenges in the ever-changing AI market, its strong position and potential expansion into other regions make it a compelling investment opportunity.
Reitzes Reaffirms Buy Ratings for Nvidia and Cisco
Reitzes, a prominent analyst on Wall Street, has maintained a Buy rating for tech giants Nvidia and Cisco. Reitzes projects Nvidia’s two-year target price to be $730, based on a price-to-earnings multiple of 35 times the company’s projected 2026 earnings. This optimistic outlook sets Reitzes apart from other analysts, as the average target price for Nvidia is $655 among 52 analysts surveyed by FactSet.
Although Cisco hasn’t been a top choice in the AI sector, Reitzes believes this perception could change with the company’s planned acquisition of cybersecurity and data-analytics firm Splunk. Cisco’s announcement of a $28 billion acquisition plan in September has sparked interest. Reitzes predicts that Splunk’s expertise in leveraging log data will enable them to offer a powerful Generative AI solution to customers tackling network problems. While this potential catalyst is long-term, Reitzes anticipates positive results from Cisco’s upcoming earnings report, especially after Arista Networks exceeded expectations, driven by demand from AI companies.
Reitzes maintains a Buy rating for Cisco, with a two-year target price of $68. This target is calculated using a price-to-earnings multiple of 14 times Cisco’s projected 2026 earnings.
As of premarket trading on Tuesday, Nvidia shares were down 0.7% at $454.51, and Cisco shares were down 0.4% at $53.07.
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