Nvidia is working to increase production capacity. A return to China could boost Nvidia's 2026 sales. The stock trades at a reasonable price tag for its growth.
Nvidia currently has a $4.5 trillion market cap. If it were to rise to $7 trillion in 2026, that would require the stock to rise by 56%.
AI hyperscalers spent a record amount of money constructing data centers in 2025. All of them have informed investors that 2026 will see increased spending as well. That's a big deal for Nvidia, as its graphics processing units are the gold standard computing unit used to train and run artificial intelligence models.
Nvidia's GPUs are the best available, but so are the supporting components, like its controlling software and connecting infrastructure. This makes Nvidia the go-to company to outfit data centers, but there's an issue: Nvidia has sold out all of its cloud GPU capacity. Nvidia must work to increase its capacity to meet this unprecedented demand, and it has already taken several steps to maximize its output.
First, Nvidia plans to significantly reduce its gaming GPU output in 2026. That move will free up chips to be used in the more profitable and in-demand cloud GPUs. Second, Nvidia is pushing its chip supplier, Taiwan Semiconductor Manufacturing, to increase its output.
For fiscal year 2027, Wall Street analysts expect Nvidia to grow its revenue by 50%. Analysts have consistently underestimated Nvidia's growth potential.
Nvidia appears poised to resume shipments of chip sales to China. According to Reuters, there is demand for about 2 million units, while Nvidia has about 700,000 H200 chips on hand. There could be even more demand if these initial shipments go well.
For Nvidia to get to a $7 trillion market cap, we need to make a few assumptions: Nvidia's profit margins maintain their current level. Nvidia meets analysts' expectations of 50% growth. Nvidia's valuation stays at its current level. AI spending is projected to continue in 2027.
The average Wall Street analyst projects $320 billion in revenue for fiscal year 2027, at Nvidia's current 53% profit margin, which would equate to $170 billion in profits by the end of the fiscal year. Nvidia's current price-to-earnings ratio is 46.
With $320 billion in profits at a P/E ratio of 46, that would value the stock at $7.8 trillion.
Multiple projections indicate that AI spending will continue to grow through 2030.