Key Stats for NVDA Stock
- Past week’s performance: -1%
- 52-week range: $165 to $234
- Valuation model target price: $595
- Implied upside: 164.6% over 2.3 years
Model Nvidia’s next three years of AI revenue with analysts’ forecasts built in (It’s free) >>>
AI Demand Keeps Outrunning Supply While Bubble Talk Gets Louder
NVIDIA (NVDA) stock is down 1% this week, holding near $225 as investors weighed two competing narratives. AI demand keeps setting records. But a widely read column this week argued that an “Everything Bubble” has returned, naming Nvidia among its examples. The mood is cautious excitement, not fear.
The backdrop is still August’s blockbuster Q2 report for fiscal 2027. Revenue jumped 106% to $96.2 billion, and Data Center sales rose 117% to $89.0 billion. Non-GAAP EPS, which excludes items like stock-based pay, reached $2.22 versus a $2.10 estimate. Management then guided Q3 revenue to $108 billion, plus or minus 2%.
The bigger signal was about supply, not demand. “Although we will work to close the supply-demand gap, we expect supply to remain a bottleneck at least through the end of fiscal year 2028,” CFO Colette Kress said on the earnings call. She also gave a preliminary outlook for roughly 70% revenue growth in fiscal 2028. In short, customers want more chips than Nvidia can build.
Deals this month reinforced that runway. Amazon Web Services plans to deploy 2 million additional Nvidia GPUs, or graphics processing units, across 2027 and 2028. Nvidia also committed another $1.5 billion to power developer SB Energy, lifting its total backing to $3 billion. Going forward, investors will judge the stock on how fast Rubin ships, not on whether demand exists.
The Model Assumes Growth Stays Hot While the Multiple Cools
Under valuation model assumptions realized through 1/31/29, the stock is modeled using:
- Revenue Growth (CAGR): 60.5%
- Operating Margins: 63.0%
- Exit P/E Multiple: 18.7x
Based on these inputs, the model estimates a target price of $595, implying 164.6% total upside from the current share price of $225 and a 51.2% annualized return over the next 2.3 years.
That return profile looks deeply undervalued, but it rests on one big bet. Revenue must compound 60.5% a year, slightly below the 65.5% pace of the past 12 months. So the model assumes Nvidia stays close to its current trajectory. Management’s 70% preliminary outlook for fiscal 2028 supports that starting point.
Margins look realistic by comparison. Operating margin, the share of sales left after running the business, was 66.5% over the past year. The model trims that to 63.0%, which leaves room for higher costs as Rubin ramps. Meanwhile, Q3 gross margin guidance of 74.0% suggests pricing power remains intact.
The conservative lever is the multiple. An exit P/E of 18.7x sits well below Nvidia’s 5-year average of 36.7x and its current 24.6x. In other words, the model already prices in a de-rating as growth matures. Broadcom’s 86% revenue growth shows AI chip demand is broad, not unique to Nvidia.
Timing is the real risk. A Rubin delay or a pause in hyperscaler spending would hit growth and the multiple at once. Still, this is a revenue acceleration story with a built-in cushion, and the annualized return clears the 15% bar for genuine undervaluation.
Adjust Nvidia’s exit multiple and see how much upside survives a slowdown (Free with TIKR) >>>
Custom Chips and Huawei Chase an Nvidia That Keeps Widening the Gap
Broadcom (AVGO) is Nvidia’s most direct challenger in AI data centers. It designs custom accelerators, called XPUs, for large customers building their own chips. Its fiscal Q3 revenue grew 86% to $29.6 billion, while AI semiconductor revenue jumped 221% to $16.7 billion. Broadcom’s non-GAAP operating margin reached 67.9%.
Nvidia still operates at a far larger scale. Its Q2 Data Center revenue of $89.0 billion is more than five times Broadcom’s AI chip revenue. And Nvidia’s LTM operating margin of 65.2% sits close to Broadcom’s, even though Nvidia sells full systems. That full stack, covering GPUs, CPUs, networking, and software, is the core of its moat.
Huawei is emerging as a credible challenger inside China. However, Nvidia’s China exposure is already tiny. Hopper shipments to China were less than 1% of Data Center revenue last quarter. So Huawei’s gains mostly cap Nvidia’s upside in China rather than threaten its core business.
Apple (AAPL) is pressing from a different angle. Its new Mac Studio offers up to 512GB of memory for running AI models locally, starting at $5,499 with the M5 Ultra chip. That targets developers who might otherwise rent GPU capacity. Yet local AI remains a niche next to hyperscale data centers, where Nvidia earns most of its revenue.
Examine whether Nvidia’s customer financing expands growth or amplifies shareholder risk >>>
What’s Driving NVDA Stock Going Forward?
Rubin execution is the next major test. Vera Rubin, Nvidia’s newest AI platform, began production shipments in August. Management expects it to account for about 20% of Data Center revenue in Q3. A smooth ramp would support the $108 billion revenue guide.
Supply remains the ceiling on growth. Power, memory, and data center space all limit how quickly customers can install new systems. That is why the $3 billion SB Energy commitment matters, since it helps unlock the physical capacity behind GPU orders. Similarly, AWS’s plan for 2 million more GPUs gives Nvidia visibility into 2028.
Policy risk has not disappeared. Nvidia took a $0.4 billion charge in the first half for excess H200 inventory as demand for that chip faded. Jensen Huang is also on the guest list for the Trump and Xi state dinner, which keeps China trade in focus. Any export easing would be pure upside, because China barely registers in current results.
Q3 results will show whether revenue lands near $108 billion and gross margin holds near 74.0%. If both hit, the debate could shift from bubble fears to how long supply stays tight.
Line up Nvidia’s forward estimates against Broadcom’s before Q3 results (Free with TIKR) >>>
Should You Invest in NVIDIA?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
