Key Takeaways
- Nvidia stock has climbed 19% YTD to $225, a gain that trails a Q2 in which revenue more than doubled YoY to $96B.
- The stock’s P/E has shrunk 25.8% over the past year while EPS grew 59.5%.
- Management guided to ~70% revenue growth in fiscal 2028 and called that figure supply-constrained, while cutting its gross margin outlook to a 71%-72% trough in Q4 as memory costs climb.
- TIKR’s mid-case model values Nvidia stock at $661 by January 2031, implying 194% total return, or 28% annualized.
Why Nvidia Stock Has Gained 19% This Year as Its Revenue Doubled
Nvidia (NVDA) stock closed at $225 on Friday, September 25, up 19% since the start of 2026. That is a respectable gain, and a modest one for a company whose second-quarter revenue more than doubled year over year to $96 billion.
The path there was rough. Nvidia stock bottomed below $170 in late March, then topped $230 in mid-May after first-quarter adjusted EPS of $1.87 beat the $1.76 consensus. It gave much of that back by late July, sliding toward $190, before an August 26 report with adjusted EPS of $2.22 against a $2.10 estimate pushed shares back above $220.
Over the past year, Nvidia’s EPS grew 59.5% while the stock’s price-to-earnings multiple compressed 25.8%. Investors now pay less for each dollar of Nvidia profit than they did twelve months ago, even as those profits compound at a pace few megacaps have ever sustained.
The Q2 call explains part of that discount. Nvidia guided third-quarter revenue to $108 billion and set a preliminary target of 70% revenue growth for fiscal 2028. CFO Colette Kress framed that number as a ceiling set by supply rather than by buyers: “Customers’ forecasts point to our growth doubling next year. However, as I mentioned earlier, we expect to grow approximately 70% as we are supply constrained.” So the fiscal 2028 question is about wafers, memory and power, and Nvidia expects that bottleneck to last through the end of the year.
Scarcity carries a cost, too. Kress reset gross margin guidance to 74% for Q3 and a 71% to 72% trough in Q4, down from 75% in Q2, before a partial recovery to 72% to 73% in fiscal 2028 as memory prices climb. Rates turned hostile around the same time: the 10-year Treasury yield hit its highest level since 2007 on September 23, and traders priced a 71% chance of an October Fed hike.
Still, Nvidia stock has gained ground this quarter while the Philadelphia Semiconductor Index shed 14%. The market has accepted Nvidia’s demand story and marked the multiple down anyway, because it suspects Nvidia is helping to finance part of that demand.
Nvidia’s Financing of AI Labs Is the Discount Built Into the Stock
That financing is where the bubble debate lands on Nvidia stock. Nvidia has invested nearly $50 billion in frontier AI labs and expects labs supported by its balance sheet to account for a quarter of its business next year. In August, it signed memorandums with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to build financing platforms targeting over $500 billion of third-party capital.
Skeptics have a name for this. Reuters Breakingviews columnist Edward Chancellor argued on September 24 that circular financing among AI’s leading players “depends critically on expectations of continuously accelerating revenue growth,” citing former Morgan Stanley strategist David Roche’s estimate of more than $3 trillion in on- and off-balance-sheet debt across US tech giants and AI labs.
Nvidia’s defense rests on the hardware. Kress argued the compute is fungible and can be redeployed to other customers if a lab stumbles. China contributes nothing to the forward outlook, so Huawei’s Ascend 960 chips, due in 2027, threaten upside Nvidia has already written out of its numbers.
TIKR Values Nvidia Stock at $661, Pricing In Years of AI Buildout
TIKR’s mid-case model values Nvidia stock at $661 by January 2031, implying 194% total return from the current price of $225, or 28% annualized over 4.3 years.
A 28% annual return sits far above what a $5 trillion-plus megacap usually delivers, and it would make Nvidia one of the market’s top compounders for a second straight half-decade.
The gap between the price and the target exists because the market is valuing Nvidia on the risk that lab financing unwinds, while the model credits the 70% growth guidance and a margin reset that still leaves gross margin above 70%. The past year’s P/E compression has already absorbed much of the bubble fear, so at $225 Nvidia stock pays investors to hold that risk rather than charging them for it.
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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!
