Nvidia (NVDA), embracing next-gen Rubin for a 35% rally?..."Target Price $267"

▲ Nvidia (NVDA)/AI generated image

An analysis suggests that investing $1,000 in Nvidia (NVDA) could see its value grow to $1,351 after one year.

According to Nasdaq on August 2 (local time), Nvidia's stock closed at $197.01 on July 28. An investment of $1,000 at that price would purchase approximately 5.08 shares. This forecast is not based on the assumption that past returns will simply repeat, but rather reflects an upward revision of earnings forecasts and the potential for an expanded price-to-earnings (P/E) ratio.

Nvidia has consistently exceeded Wall Street's earnings forecasts. Following its February 2024 earnings announcement, the 12-month forward earnings per share (EPS) forecast was raised by approximately 21%, from $22.52 to $27.19 in May of the same year. At that time, the launch of Blackwell, which combines AI semiconductors, central processing units, and networking equipment, boosted growth expectations.

The market is watching to see if a similar trend will emerge with the next-generation platform, Vera Rubin. Nvidia is expanding Rubin production ahead of its full-scale supply in the second half of 2026. Rubin will provide graphics processing units, central processing units, networking, switches, storage, and software as a single system. This structure allows Nvidia to increase revenue secured from a single customer.

Wall Street forecasts Nvidia's EPS for fiscal year 2027 at $8.99. The forecast for fiscal year 2028 is $12.87. Applying the average earnings forecast beat rate of 3.7% over the past eight quarters, the EPS for fiscal year 2028 rises to approximately $13.35.

If the stock price in July 2027 is valued at 20 times the estimated EPS, the target price becomes approximately $267. The value of 5.08 shares purchased for $1,000 would increase to approximately $1,351. The estimated return is about 35%. This 20x multiple is lower than Nvidia's estimated P/E ratio of approximately 21.9x based on its fiscal year 2027 earnings forecast.

For the stock price to reach $267, the expansion of Rubin supply and continued AI investment by large cloud providers are necessary. Deteriorating profitability of AI investments, intensifying competition, and semiconductor export regulations are key risk factors. The analysis evaluates Nvidia as a long-term investment but suggests a dollar-cost averaging strategy rather than a lump-sum purchase.

[Article Key Summary]

-If Nvidia's stock price rises to $267, a $1,000 investment would increase to approximately $1,351.

-The forecast reflects the assumption that Nvidia will exceed market expectations by 3.7% on average, as it has over the past eight quarters.

-Expanded Rubin supply and continued AI investment are key variables for achieving a 35% return.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*