Nvidia, AMD, Marvell Targets Cut: Melius Pulls Back on AI Stocks as Big Tech Lines Up to Raise Cash

Melius Research reiterated its Buy rating on Nvidia Corp. (NASDAQ:NVDA) while lowering its price target to $315 per share from $420, CNBC reported Monday. The new target sits 25% below the old one.

Nvidia had company. Melius also reduced targets on Advanced Micro Devices Inc. (NASDAQ:AMD), Broadcom Inc. (NASDAQ:AVGO), Marvell Technology Inc. (NASDAQ:MRVL), Dell Technologies Inc. (NYSE:DELL), Qualcomm Inc. (NASDAQ:QCOM) and CoreWeave Inc. (NASDAQ:CRWV).

• NVDA stock is climbing Monday. Get all the details here.

A Flood of Paper

The primary warning in the note concerned the sheer volume of securities headed to market.

According to the firm, "at least 5 trillion-dollar plus companies … have to issue hundreds of billions in securities." Melius added, "The amount of paper is so large it has become the primary risk."

Heavy issuance creates a supply problem for markets. Every new bond or share sale competes for the same pool of investor capital, which can weigh on prices across a sector. Chip suppliers would feel the effect secondhand, since their largest customers would be paying for orders with borrowed or newly raised money.

Few analysts have framed the AI trade around financing quite so bluntly. Most of the debate over the past year has focused on demand, supply constraints and whether spending would translate into profits. 

Melius moved the spotlight to the balance sheet side of the equation.

Pressure on Multiples

Valuation drove the price target cuts. In its note, the firm said it was lowering targets "as multiples may remain under pressure as the buildout will feature more backstops throughout 2028."

In financing terms, a backstop is a commitment from one party to cover funding or absorb losses if other sources fall short. Melius appears to expect more of the AI infrastructure buildout to lean on such arrangements over the next two years. 

Structures of that kind can make investors more cautious about paying premium multiples, even with revenue still rising.

Three of the seven companies face an added hit. Melius trimmed PC- and smartphone-related estimates at AMD, Dell and Qualcomm, according to CNBC. Weaker consumer device demand would land on top of the valuation pressure facing the broader data center trade.

The Buy rating on Nvidia stands. The lower target reflects a reset in what Melius believes investors will pay for chip earnings across the group, with the 2028 time frame suggesting the firm expects the pressure to linger.

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