Nvidia (NASDAQ: NVDA) stock has had a lackluster performance this year, especially when compared to the past three. It’s up around 9%, just behind the S&P 500 (SNPINDEX: ^GSPC), which is up around 10%. The chipmaker is also down by more than 10% from its peak. However, a rebound could be coming.
The reality is that Nvidia is doing much better as a business than the stock’s trajectory would indicate. That’s great news for investors, as it gives you an opportunity to get into the stock before it heads higher, because over the longer term, stock performance and business results eventually correlate strongly with each other. By the end of next year, Nvidia’s stock price could be far higher.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Nvidia has two major catalysts coming up in the next year and a half
Nvidia’s primary growth catalyst, the artificial intelligence (AI) data center build-out, is still going strong. This year, the four major hyperscalers project over $650 billion in data center capital expenditures. However, next year, Nvidia estimates this figure will top $1 trillion. That sets the chipmaker up to deliver another year of strong revenue growth. Wall Street analysts project 41% revenue growth next year.
However, Wall Street has consistently been too conservative in its predictions for Nvidia’s growth, and I think it’s undershooting the mark again.
If Nvidia management is correct in its forecast that hyperscalers’ data center capex will rise from $650 billion in 2026 to $1 trillion in 2027, that’s 54% growth right there. Furthermore, Nvidia’s new Vera Rubin architecture will start shipping to clients in quantity later this year. The arrival of these processors could prompt some AI firms to upgrade servers to hardware that handles inference workloads at a tenth of the cost of Blackwell GPUs and training workloads at a quarter of the cost.
Wall Street expects Nvidia to report earnings of $12.79 per share next year, but that’s based on a likely lower growth rate than Nvidia will deliver. Yet even assuming that forecast turns out to be correct, if the company finished next year with a valuation of 25 times earnings, that would price Nvidia’s stock at $320 per share — more than 50% higher than today’s levels. And I think that’s a conservative projection.
