Analysts Expect Nvidia Stock to Soar 47%, But You Shouldn’t Rush to Buy NVDA Here

Nvidia (NVDA) released its fiscal Q2 2027 earnings last week. The company’s quarterly performance was stellar and helped it end the long streak of stock declines despite “beat and raise” quarters. Meanwhile, the stock fell 4.57% on Friday and now trades only slightly above its pre-earnings levels. Nvidia hit its record highs in May, and the stock has since failed to breach that level.

Nvidia’s Q2 Earnings

Nvidia’s Q2 revenues rose 106% year-over-year (YOY) to $96.2 billion, which easily surpassed Street estimates and was over $5 billion higher than the company’s baseline guidance. The Data Center segment, which sells the highly sought artificial intelligence (AI) chips, accounted for $89 billion.

Notably, beginning this fiscal year, Nvidia started reporting its data center segment into two sub-markets: Hyperscale and AI Clouds, Industrial, and Enterprise (ACIE). The move came amid growing concerns about its revenues being concentrated with hyperscalers. However, its Q2 earnings show that while hyperscalers remain a key driver and contributed $49 billion in revenues, the base is getting broad-based, with ACIE revenues rising to $40 billion. Importantly, ACIE’s growth outstripped hyperscalers, which is an encouraging sign.

For the current quarter, the company expects revenues to rise to $108 billion, with a divergence of 2% on either side, which was ahead of the $104.2 billion that analysts were expecting. The show-stopper was Nvidia's forecast of 70% revenue growth in the next fiscal year, far exceeding the 44% growth analysts were modeling. It was the first time Nvidia guided for the next fiscal year, especially so well in advance. The cherry on top was management stressing that if not for supply constraints, its revenues would double next year.

Incidentally, fellow Magnificent 7 peers use the boilerplate disclaimers like “uncertainty” and “potential changes in tariffs and other geopolitical conditions” impacting the guidance even when guiding for the current quarter. In fact, Tesla (TSLA) has stopped providing the annual delivery guidance altogether. Here we have a Mag 7 constituent guiding for the next fiscal year, which signals its confidence in revenue visibility. Going by the backlog and supply constraints, we can be reasonably sure that Nvidia will continue to grow at a fast pace until at least 2028.

NVDA Stock Forecast

While there were multiple cursory target price adjustments from sell-side analysts following Nvidia’s fiscal Q2 confessional, a few stand out. For instance, Bernstein raised its target price from $315 to $400 while Rosenblatt raised its target from $325 to $390. Raymond James raised Nvidia’s target price from $352 to a Street-high of $515. Nvidia’s mean target price now sits at $324.44, which is 47.7% higher than current price levels.

Should You Buy Nvidia Stock?

Nvidia trades at a forward price-to-earnings multiple of 25.55 times with a P/E-to-growth (PEG) multiple of just 0.44 times. The company brings prospects of the highest top-line and bottom-line growth among Mag 7 stocks while its valuations are not much different from the group’s average, excluding Tesla.

However, investors should be cognizant of risks. First, scrutiny of its financing deals is increasing. The company has defended these deals, and during the Q2 earnings call, CFO Colette Kress said, “We recognize the scale of this support, and we know some will call this circular financing. We see it differently.” She added that the AI labs Nvidia has funded in some form would account for a quarter of its business next fiscal year.

CEO Jensen Huang also chipped in and said, “Investing in these companies are once-in-a-generation opportunity. I think the only regret that I have is that I didn't invest more and sooner.” Indeed, these deals may add a new layer of risk for Nvidia and make it even more dependent upon AI for success. 

Overall, while I remain bullish on Nvidia and continue to hold my shares, I won’t jump in to add more shares. Moreover, I am not too sold on the idea of the stock rising near 50% over the next year, as the average sell-side analyst seems to believe and reiterate that returns would be a lot more grounded compared to the previous three years.