Key Takeaways
- Palo Alto Networks CEO Nikesh Arora says NVIDIA can’t supply chips for 2028, and Microsoft, Alphabet and Amazon report their capital spending plans next week.
- NVIDIA’s growth through 2028 looks limited by how many chips it can make, so Wall Street’s revenue estimates look conservative.
- Analysts expect revenue to rise 68% in the year ending January 2028. That’s in line with management’s guidance, which it says is limited by supply.
- NVIDIA trades at 17x forward earnings, its lowest multiple in three years.
AI critic Ed Zitron thinks NVIDIA (NVDA) is selling a shortage it made up.
“There’s not scarcity other than that which is created by Jensen Huang,” Zitron, CEO of public relations firm EZPR, told Yahoo Finance’s The 8:30 on Friday. He called it “channel stuffing”: pushing customers to buy now, before the chips run out.
Then a big buyer of AI computing power described what the market actually looks like.
On this week’s All-In podcast, Palo Alto Networks (PANW) CEO Nikesh Arora said building his own AI data centers would be “kind of an empty threat.” Part of the reason:
“you talk to Jensen, he can’t give you chips for 2028.”
Channel stuffing usually looks a little different.
And it comes days before Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN) report the capital spending that turns into NVIDIA’s revenue. (Management said in February that the five biggest cloud providers make up a little over half of its data center sales.)
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Sold out from top to bottom
Palo Alto isn’t the only one waiting. Tenstorrent CEO Jim Keller, who sells rival AI chips, told Bloomberg’s Liana Baker that if you want to buy $10 million worth of NVIDIA product, “you maybe won’t get a call,” as she recounted on the Bloomberg Tech podcast.
Keller has his own reasons to say it. But a company stuffing its channel doesn’t usually leave $10 million orders on hold.
Wedbush’s Dan Ives put a number on it on Bloomberg Surveillance: “today demand supply is 13 to 1.”
And prices are rising. Renting an H100 costs 45% more than it did in December, according to Social Capital, even though the chip went on sale in 2022 and two newer generations have come out since.
It’s the 2021 used-car market all over again: when you can’t get a new one, the old ones go up.
Wall Street’s estimates look conservative
That changes how to read analysts’ revenue estimates.
Analysts expect revenue to climb from $215.9 billion in the year ended January 2026 to $692 billion in the year ending January 2028, up 68% on the year before. That’s right in line with management’s guidance of about 70% growth for that year. On NVIDIA’s August earnings call, management said that figure is limited by supply, and that customers’ forecasts point higher.
After that, analysts expect growth to slow to about 30% in the year ending January 2029, which covers nearly all of calendar 2028. If NVIDIA already can’t promise chips for 2028, that slowdown comes down to how many chips it can make.
Margins point the same way.
Gross margin slipped to 71.1% in the year ended January 2026, from 75.0% the year before, partly because of a $4.5 billion charge on its H20 chips for China. It was back to 75.0% in the quarter ended July 2026. Management expects a dip to 71% to 72% in the January 2027 quarter as memory costs climb. It’s responding with price increases that take effect in early 2027.
Raising prices while costs climb is what a seller with a waitlist does.
Watch who’s paying
Orders are only as good as the money behind them. Five direct customers held 70% of NVIDIA’s receivables at the end of July. And management expects AI labs it backs with its own balance sheet to be roughly a quarter of next year’s business. If lenders turn on the neoclouds, some of those 2028 orders could turn into cancellations.
Priced like the boom is ending
Yet the stock is priced as if this is the top.
At 17x forward earnings, NVIDIA trades at its lowest multiple in three years, against a 30x average and a peak of 47x in June 2024.
My take: if customers can’t get chips two years out, analysts’ estimates look like a starting point. And 17x is a cheap price for a company with that much demand waiting in line.
Of course, all of this depends on the spending continuing. Microsoft’s, Alphabet’s and Amazon’s capex plans next week are the first check, and NVIDIA’s own report on Nov. 17 is the next.
So what is NVIDIA stock actually worth?
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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 of the stocks mentioned. Thank you for reading, and happy investing!
