Investment bank Citi on Friday lowered its forecast for U.S. data center builds and cut its price targets on AI chipmakers Nvidia and Marvell Technology. Nvidia stock and Marvell both rose on Friday.
Citi now expects the top four U.S. cloud service providers to increase their data center capital expenditures by 35% in 2025 and 15% in 2026. It previously modeled growth of 40% in 2025 and 20% in 2026.
The four hyperscale cloud computing firms are Amazon, Meta Platforms, Microsoft and Alphabet unit Google.
"Our revised outlook reflects lower GDP (gross domestic product) expectations as well as our views on Microsoft spending plans and negative impacts to data center capex due to macro uncertainty," Citi analyst Atif Malik said in a client note.
The Trump administration tariffs are a major factor behind the reduced GDP and data center capex, he said.
The lower capex will crimp sales of graphics processing units from Nvidia and custom AI accelerators from Marvell, Malik said.
Malik kept his buy rating on Nvidia stock but cut his price target to 150 from 163. He also cut his price target on Marvell to 96 from 122 and maintained his buy rating.
On the stock market today, Nvidia stock rose 3.1% to close at 110.93. Marvell stock alternated between modest gains and losses but ended the session up 1.1% to 53.39.
Nvidia stock ranks second out of 39 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. Marvell ranks No. 13 in the group. However, the fabless chipmaker group ranks a lousy No. 194 out of 197 groups that IBD tracks.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
