Nvidia (NVDA -3.01%) stock has turned in a disappointing performance so far in 2025, dropping 26% since hitting a 52-week high in the first week of the year, and the broader market sentiment suggests that it may not be out of the woods yet.

The semiconductor giant is contending with multiple challenges ranging from a potential slowdown in artificial intelligence (AI) infrastructure spending to the rising competition in the AI chip market to a potential increase in manufacturing costs thanks to the ongoing tariff war. Nvidia received another blow last week after investment bank Citi lowered its price target on the stock to $150 from $163, citing a slight slowdown in data center spending in the U.S.

However, it is worth noting that Nvidia's 12-month median price target, as per 67 analysts covering the stock, stands at $175, which points toward a 58% jump from current levels. But can Nvidia do better than analysts' expectations and hit $200 despite a challenging economic scenario? Let's find out.

Data center spending is unlikely to slow down

One reason why Citi cut its price target on Nvidia is a potential slowdown in data center construction. The investment bank is anticipating 35% growth in data center spending this year by the top four cloud infrastructure providers -- Amazon, Meta Platforms, Alphabet, and Microsoft (MSFT -1.13%) -- as compared to the earlier estimate of 40%. It sees a further slowdown in 2026, with spending expected to increase by 15%.

The lower estimate can be attributed to a projected slowdown in economic growth due to the tariff-related uncertainty. Microsoft, for instance, has already said that it is "slowing or pausing" the construction of some data centers in Ohio that are in the early stages. The tech giant is reportedly scaling back some of its data center construction internationally as well.

However, Microsoft's move to slow down data center expansion can be attributed to the change in its arrangement with OpenAI. Earlier, Microsoft was the sole provider of data center capacity to OpenAI. However, OpenAI can now build its own data center infrastructure. The company is a part of the Stargate project, under which it is reportedly going to build AI data centers with an investment of $100 billion.

The first Stargate data center is expected to be completed by the middle of next year in Texas, and it will reportedly be equipped with 400,000 AI GPU (graphics processing unit) systems from Nvidia, according to a Bloomberg report. OpenAI and its partners are expected to construct around 10 AI data centers as a part of the Stargate project. If that's indeed the case, the demand for Nvidia's chips should continue to remain solid and drive remarkable growth for the company.

That's because each Nvidia Blackwell B100 GPU is reportedly priced between $30,000 to $35,000. Meanwhile, a combination of Nvidia's Blackwell GPU and the Grace CPU (central processing unit) could be priced between $60,000 and $70,000. What's more, the flagship server system composed of multiple Nvidia GPUs and CPUs can command a price of $3 million, while mid-range systems can cost $1.8 million.

So, the massive investments under Stargate, which could go up to $500 billion over the next four years, could ensure that Nvidia's data center business continues to grow at a healthy pace. Another thing worth noting is that cloud computing giants are unlikely to cut spending on AI infrastructure. Alphabet, for instance, has reiterated that it will stick to its $75 billion capital spending forecast for this year.

Amazon has also laid out a $100 billion capital spending plan for the current fiscal year, a huge majority of which is expected to be on AI data centers. Even OpenAI recently raised $40 billion in funding to shore up its AI infrastructure. The fact that the Trump administration has exempted smartphones, computers, and chips, among other electronic equipment, from the reciprocal tariffs imposed on China should help cloud computing companies stick to their capital expenditure plans and give Nvidia a boost.

In all, the stage seems set for Nvidia to sell more of its data center GPUs going forward. But will that be enough to help the stock regain its mojo?

Does $200 look like a possibility for Nvidia stock?

Nvidia is expected to maintain a solid pace of earnings growth in the current fiscal year (which will end in January next year). Analysts are forecasting a 51% jump in its bottom line in fiscal 2026 to $4.53 per share. Nvidia is currently trading at 25 times forward earnings, which is lower than its five-year average forward earnings multiple of 40.

However, don't be surprised to see Nvidia's earnings growth outpace the market's expectations in the coming year, as it is forecasting an improvement in its margins later in the fiscal year. However, even if we assume that Nvidia manages to deliver $4.53 per share in earnings in the current fiscal year, which would be a nice improvement over last year, and the market rewards its strong earnings growth with a higher multiple of 40 (in line with its five-year average forward earnings multiple), its stock price could hit $181.

While that's below the $200 mark, it would still represent a 63% upside from current levels. However, if Nvidia manages to clock stronger earnings growth as its margins pick up, it could very well hit the $200 mark. That's why investors looking to buy a top tech stock that's trading at an attractive valuation and is capable of delivering healthy gains should consider buying Nvidia before it steps on the gas once again.