Here’s How Nvidia Could Surge 88% (or More) Over the Next Year Based on Its Latest Forecast

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Nvidia (NVDA) delivered a blowout second-quarter earnings report, showing massive revenue and earnings growth. Despite the chipmaker’s breakneck growth during the past five years, investors will be thrilled to hear that there’s still 88% upside in the stock if management meets its estimates.

Nvidia grew sales a blistering 106% year over year in the latest quarter, while operating income soared 124%. That’s on top of several years of explosive sales and earnings growth. Still, management projects it can grow sales by another 70% in the next fiscal year.

It would be an incredible performance from a company that has delivered a string of them.

But it won’t be all tailwinds in the year ahead. Nvidia’s massive scale means it’s having difficulty increasing margins as it has in the past, losing a key lever to drive incremental profits. In fact, management expects gross margins to decline in the next fiscal year to a range of 72% to 73%. But that’s only after Nvidia raises prices to offset cost increases passed on by memory makers such as Micron Technology (MU).

This decline would meaningfully hit the company’s gross margins over the past few years.

Growing sales will likely boost efficiencies, so this gross-margin decline doesn’t flow straight into lost operating margin. That is, sales may grow fast enough to offset most of the margin decline, so that it doesn’t hurt overall profitability too much.

But don’t cry too much for Nvidia. If the company achieves its sales objective for next year, it could well grow earnings at a similar rate, depending on how much cost it can pass along.

This could result in surging profits at a rate unprecedented for a company of Nvidia’s size, which now has a market capitalization of around $5.3 trillion – and it means investors can expect much more upside.

Nvidia Could Double Over the Coming Year

So, let’s run through some expectations of what Nvidia stock could return to investors. Since Nvidia’s second-quarter report, in which it announced projections of 70% sales growth, analysts have drastically boosted their earnings forecasts.

Nvidia’s analyst consensus earnings per share target is $9.29 per share for the current fiscal year. With Nvidia’s stock recently around $220 per share, it is trading at roughly 23.7 times this year’s earnings.

Looking ahead, analysts expect earnings per share of $15.31 in the fiscal year ending January 2028, after raising their projections from $13.01 per share a week or so before Nvidia released its second-quarter results. So, analysts expect Nvidia to grow earnings nearly 65%, or roughly in line with management’s estimated sales growth.

Let’s build a matrix of potential returns with these growth numbers and price-to-earnings (P/E) multiples, assuming returns from Nvidia’s recent price of $220.

Upside in Nvidia Stock at Various Earnings and Multiples

Let’s use the center square as our “base case,” which shows that if Nvidia grows earnings 65%, as analysts project, the stock will return 65% if the P/E multiple stays where it is now (23.7 times). If the multiple stays the same and earnings grow 60% (or 70%), then the stock will return 60% (or 70%).

Of course, if the stock grows earnings at these levels and investors pay a lower earnings multiple, returns will lag Nvidia’s earnings growth. Even then, if Nvidia grows earnings by 60% but investors pay only 20 times earnings, the stock would return 35%.

On the other hand, if Nvidia hits these high growth targets and investors pay a P/E multiple of 27, the stock’s performance will outpace its earnings growth. For example, 65% earnings growth at a P/E ratio of 27 would mean Nvidia stock climbs a stunning 88%.

If Nvidia can deliver more than the analysts expect – as seen with this year’s upward string of analysts’ earnings expectations – the stock could well double. With Wells Fargo noting that Nvidia has traded at about 32 times earnings over the past three years, the potential upside could be huge.

Will Nvidia Soar in 2027?

Nvidia is a massive company that is heavily watched with millions of investors tracking its moves, and dozens of professional analysts projecting the company’s earnings.

So, you have to consider: If Nvidia is such a great deal, then why is it on sale for anyone willing to do the kind of legwork above? It comes down to risk.

Here are a few of the most critical risks that could negatively impact the returns projected above.

1. Is the Market Pricing in an AI Bust?

Nvidia is selling for just over 14 times its estimated earnings for next year – that seems very cheap.

But maybe not if the stock market is concerned that the artificial intelligence (“AI”) bubble could burst. The big AI stocks have been treading water in recent months, and Nvidia has struggled to hold its current $220 per share level for long. The pricing could signal significant skepticism, at least among some investors, about the durability of Nvidia’s earnings.

So, comparing Nvidia’s historical P/E ratio with its current or near-term multiple means nothing if the company can’t sustain a high level of growth, since a P/E assumes certain growth expectations.

2. Nvidia Is Getting Extremely Aggressive With Financing

Nvidia has needed to get very aggressive about financing its clients, presumably to keep its stellar sales growth on track. Nvidia has its hands in so many investments that it’s becoming something of a “central bank of AI,” including providing hundreds of billions in financing and a backstop for the largest AI data center ever announced, in a tie-up with OpenAI.

It’s also backstopping other development deals, such as a $35 AI billion data center with cloud provider Lambda. Lambda signed the deal for the data center to be rented by AI lab Anthropic, while Nvidia decided to hold the lease on the facility, according to the Wall Street Journal.

While some analysts are rightly worried about Nvidia’s practice of circular financing – where the seller offers aggressive financing for its own buyers – the bigger picture is troubling on its own.

Nvidia’s biggest customers, the hyperscalers, are already borrowing hundreds of billions to fund their AI investments beyond what their own cash flow will support. Nvidia’s need to offer additional financing suggests traditional levers (i.e., investors) are struggling to fund these purchases.

The need for creative financing suggests that sales growth is running too hot and isn’t likely to be sustainable.

3. AI Relies Heavily on Two Money-Losing Companies

While OpenAI and Anthropic are among the most celebrated AI companies, they’re two black holes at the center of the AI bubble, devouring capital at a ferocious rate. Investors have serious questions about whether they can ever be profitable, particularly with encroaching Chinese competition.

These AI labs have made promises to many big AI players in the form of spending commitments that they may simply not be able to meet. Because they burn so much cash, they must raise more capital from investors. This setup means that if the market ever loses confidence in their future, the firms will eventually run out of money, causing a major downturn in the AI buildout.

Right at the center of that build-out, of course, is Nvidia.

If Nvidia can really deliver the sales growth it’s projecting, and the AI build-out can continue for another year, the stock could put up extraordinary returns over the coming year. But investors have plenty of signs to indicate that the AI economy is a lot less healthy than it may appear, given the sales figures. Caveat investor.

Regards,

James Royal, PhD

Editor’s Note: What ever happened to the AI stock boom? Even AI darlings like Nvidia have essentially gone nowhere since summer 2025. Our friend and colleague at InvestorPlace, Louis Navellier, may have the answer. According to Louis, the AI industry is quietly “staging” ahead of the next great AI breakthrough… a new class of AI he calls “Superintelligence… but better.” How will it trigger a $100 trillion reset of the AI markets? How will the launch of this tech send some stocks to zero, and others soaring? And why does Louis say: Don’t buy or sell an AI stock in 2026 until you see what’s coming next? Go here for the full story (and Louis’ #1 pick).