Key Points
- Nvidia is already the world’s largest company, but analysts believe the chipmaker could grow even larger as AI-related spending drives profits higher.
- Projected 2026 spending from hyperscalers like Amazon and Microsoft has increased from $650 billion to $725 billion as AI investment accelerates.
- One Wells Fargo analyst estimates Nvidia is trading at less than 20 times next year’s earnings, making the stock appear attractive at current levels.
Nvidia (NVDA) is already the world’s largest company, surpassing a $5.5 trillion market capitalization for the first time on Wednesday, but it could get even larger. Investment analysts are raising their stock price targets, suggesting huge gains are in store for investors in the maker of graphics processing units (“GPUs”) that perform the intense computations necessary for artificial intelligence (“AI”).
Four investment banks increased their forecasts for the chipmaker in mid-May:
- Wells Fargo analyst Aaron Rakers bumped his price target from $265 per share to $315, a beefy 19% rise. That suggests 39% upside for Nvidia from its recent $226 price.
- Susquehanna analyst Christopher Rolland raised his price target by 10%, from $250 to $275. The move suggests a gain of about 22% for Nvidia shares.
- Bank of America raised its price target from $300 to $320, a modest 7% increase. Still, it’s the most optimistic of the four, implying 42% upside from here.
- UBS also topped up its target, boosting it from $245 to $275, an increase of 12%.
They’re remarkably positive revisions for a company that seems to have had nothing but positives over the past five years. They suggest that Nvidia will continue to be a winner, even as upstarts such as Cerebras Systems (CBRS) look to take a share of its massive margins.
Why Analysts Are Raising Nvidia’s Price Targets
Let’s dig into these new price targets and see what insights they offer.
Wells Fargo’s analysis relies on its projection that Nvidia will grow data center capacity from 9.2 gigawatts (“GW”) in fiscal 2026 to 15.7 GW the next year, then 20.8 GW and 25.2 GW in subsequent years.
Rakers notes that demand remains larger than supply, leading to “the company’s ability to scale gigawatts of AI infrastructure deployed.” His estimates put Nvidia’s revenue at $378.9 billion for fiscal 2027 (ending January 2027) and earnings at $8.45 per share. The following year’s figures come in at $530.6 billion and $11.95 per share, suggesting 41% earnings-per-share growth.
The analyst labels Nvidia a buy, since it’s trading at a forward price-to-earnings ratio of less than 20. In contrast, the stock has traded at roughly 32 times estimates over the past three years.
Meanwhile, Bank of America raised its price target on Nvidia, expecting hyperscalers to increase capital investment through 2030, with the chipmaker as the key beneficiary.
Nvidia’s biggest customers are hyperscalers – the big tech companies that are building massive AI data centers using tens and hundreds of thousands of Nvidia’s GPUs. Hyperscalers include Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META), and Microsoft (MSFT).
The Bank of America analyst raised estimates for the 2030 total addressable market for AI data-center systems from $1.4 trillion to $1.7 trillion. The report predicts accelerating AI sales this year and growing return on investment, countering one of the main bear cases.
Nvidia Benefits From Massive Hyperscaler AI Investment
Nvidia is the clear industry leader, capturing the vast majority of the GPU market with its powerful chips. It’s set to benefit from even more spending on GPUs, as hyperscalers and others continue to increase their AI investment in the sector in 2026 and beyond.
In March, I called Nvidia one of “5 Stocks to Buy for 2026” when it was trading at $185 per share and noted:
Yes, the very heart of the AI economy is growing briskly and yet trading for a bargain…
Nvidia’s graphics processing units are the muscle behind the AI data centers being constructed at a furious pace by the planet’s biggest tech companies – Microsoft, Amazon, Meta Platforms, and Alphabet. These hyperscalers are increasing capital investment 71% this year, to some $650 billion… and Nvidia is going to get more than its share of it.
Since then, the stock has been up by more than 20% and is surging to new all-time highs. With such a strong run in such a short time, should investors worry?
Despite the huge spending on AI, hyperscalers and others are boosting their investments further in 2026. That $650 billion figure in the quote above has risen to $725 billion, according to recent earnings reports. Investment should rise further in 2027.
All told, trillions more could be spent over the next few years, with Nvidia as the big winner.
Let’s look at Nvidia’s jaw-droppingly amazing sales and margins to see how they’ve held up over the past five years. Margins are a good data point for seeing how rivals may be affecting the business, showing how much a company may need to give on price to generate sales.
| Calendar year | 2021 | 2022 | 2023 | 2024 | 2025 |
| Sales | $26.9 billion | $27.0 billion | $60.9 billion | $130.5 billion | $215.9 billion |
| Gross margin | 64.9% | 56.9% | 72.7% | 75% | 71.1% |
| Operating margin | 37.3% | 15.7% | 54.1% | 62.4% | 60.4% |
Obviously, sales growth has been off the charts, and margins are among the highest of any publicly traded company. But both gross margins and operating margins have slipped a bit from 2024 to 2025. The 3.9 percentage-point decline in year-over-year gross margin was offset by higher sales volume, resulting in operating margins that dipped only 2 percentage points.
So, Nvidia’s operating margins have seen a slight decline, perhaps indicating that it’s not the only game in town. (But it’s still mostly the only game in town.)
With Wells Fargo projecting sales growth of around 75% this year, profits will soar even if margins aren’t quite as robust. Still, they bear watching to see how competitive dynamics may shift.
New entrants like Cerebras would love to get a bigger piece of the action, especially as AI workloads continue to shift from training to inference, where the company says its chips have an advantage.
Is It Too Late to Buy Nvidia Stock?
Nvidia’s sales are surging, its margins are holding up at high levels, and AI fever is in full swing as investors expect one of the hottest years for IPOs ever. Nvidia is selling a lot more and rapidly growing its earnings, all while investors are willing to pay a lot more for those profits.
That’s a recipe for a surging stock price, regardless of how big Nvidia’s market cap is today. Don’t get fooled into thinking a massive company can’t get even bigger if things are going its way.
We’ll know more when Nvidia reports earnings on May 20. Don’t be surprised to see results that blow away already-high expectations.
Regards,
James Royal, Ph.D.
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