Key Highlights

  • Baird rates Nvidia Outperform with a $500 price target, calling it one of its top large-cap ideas.
  • The firm cites Market Share leadership, gains in inferencing, and a reacceleration in Revenue growth driven by agentic AI.
  • Baird expects standalone Vera to capture a low-teens unit market share of the AI server CPU market in 2027.
  • Anthropic's reported $35 billion cloud compute agreement with Nvidia-backed neocloud provider Lambda keeps Anthropic within the Nvidia ecosystem.

Baird reiterated Nvidia Corporation (NASDAQ: NVDA) as one of its top large-cap ideas, maintaining an Outperform rating and a $500 price target, citing the company's market share Leadership and ongoing share gains, including in inferencing.

What Happened

Analyst Tristan Gerra pointed to a recent reacceleration in Nvidia's revenue growth driven by agentic AI, which the firm expects to gain further momentum next year, along with strong initial traction for incremental-revenue architectures including standalone Vera and the Grok 3 inference accelerator. Baird said its recent datapoints highlight very strong Demand for Nvidia's upcoming Grok 3 LPX inferencing accelerator, while the firm expects standalone Vera to carve out an estimated low-teens unit market share within the AI server CPU market in 2027.

The note also addressed a Wall Street Journal report that Anthropic entered into a $35 billion cloud compute agreement with Lambda, a neocloud provider backed by Nvidia. Baird said this keeps Anthropic engaged in a $35 billion cloud compute agreement within the Nvidia AI ecosystem, even as the firm acknowledged it is difficult to determine the exact mix of GPUs versus TPUs and other custom ASICs Anthropic will use going forward.

Baird framed the agentic AI acceleration and the new architecture traction as complementary growth drivers, with standalone Vera representing an incremental revenue opportunity layered on top of Nvidia's existing GPU Franchise rather than a replacement for it.

Market Reaction

Baird said it expects Nvidia to retain a compute lead, in both Training and inferencing, at Anthropic for years to come. Based on the scale of the Lambda deal alongside Anthropic's separate agreements with leading hyperscalers, the firm estimates Nvidia has secured about double the gigawatt capacity at Anthropic compared with other AI architecture suppliers.

Baird counts 14 data centers operated by Lambda offering Nvidia GPU-powered AI factories. The firm also noted that Lambda raised about $1 billion in private Short-Term Debt for computing chips three days ago, tied to its collaboration with Microsoft, which involves Microsoft leasing tens of thousands of Nvidia GPUs. Separately, in 2025 Nvidia signed a $1.5 billion contract with Lambda to Lease back 18,000 GPU-based servers that had previously been leased to Lambda.

Taken together, Baird views the layered financing and leasing arrangements between Nvidia, Lambda, Microsoft, and Anthropic as reinforcing Nvidia's central position across multiple points in the AI compute Supply chain, rather than a signal of any single customer relationship weakening.

Outlook

Continued momentum in agentic AI demand, further adoption of standalone Vera within the AI server CPU market, and the pace of Lambda's buildout in support of the Anthropic compute agreement are likely to remain the key factors Baird watches in support of its $500 price target for Nvidia.

The firm's low-teens unit market share estimate for standalone Vera in 2027 suggests Baird views this as a multi-year ramp rather than an immediate inflection, meaning near-term results in Nvidia's core GPU Business are likely to remain the more significant driver of the stock in the interim.