Blackwell And Omniverse Platforms Will Drive Secular Expansion

Key Takeaways

• Demand for NVIDIA's AI systems and rapid product development is driving sustained, multi-year revenue and margin growth, outpacing current analyst forecasts.
  
• Expansion in new AI-driven markets and networking solidifies NVIDIA's industry leadership while unlocking underestimated, high-margin, recurring revenue opportunities.
  
• Regulatory barriers, intensifying competition, customer in-sourcing, portfolio concentration, and supply chain vulnerabilities threaten NVIDIA's growth prospects, profitability, and market leadership stability.

Catalysts

A computing infrastructure company, provides graphics and compute and networking solutions in the United States, Singapore, Taiwan, China, Hong Kong, and internationally.

• Analyst consensus expects Blackwell to drive significant growth, but this view likely underestimates the scale and duration of demand for rack-scale agentic AI systems; breakthroughs in performance-per-watt and rapid customer adoption signal not just a one-time bump, but a multi-year period of persistent, compounded revenue growth and structurally higher net margins.
  
• While analysts broadly agree that NVIDIA's operational efficiency and rapid ramping of Blackwell and next-gen products will optimize margins, the annual product cadence (with Rubin already in fab and on schedule) could accelerate upgrade cycles across data centers, compounding recurring revenue and yielding a much faster net margin expansion than currently reflected in forecasts.
  
• The emergence of AI factories, Sovereign AI, and giga-scale build-outs globally is creating an addressable market measured in trillions of dollars for infrastructure, positioning NVIDIA to capture a disproportionate share of this expansion as hyperscale and sovereign investments accelerate-implying sustained step-changes in revenue and potential for upside surprise relative to current projections.
  
• NVIDIA's full-stack AI and robotics platforms, including Jetson Thor and Omniverse, are igniting entirely new verticals such as physical AI and industrial automation, laying the foundation for high-margin, recurring software and services revenues that are likely underestimated in long-term earnings power.
  
• Strategic expansion in networking (Spectrum-X, InfiniBand, NVLink, Spectrum-XGS), now reaching over $10 billion in annualized revenue and ramping rapidly, suggests NVIDIA is on track to dominate both compute and data center networking, significantly improving gross margin mix and reinforcing its industry moat into emerging edge computing and AI infrastructure markets.

NVIDIA Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on NVIDIA compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming NVIDIA's revenue will grow by 39.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 52.4% today to 49.5% in 3 years time.
• The bullish analysts expect earnings to reach $223.6 billion (and earnings per share of $9.74) by about September 2028, up from $86.6 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 36.9x on those 2028 earnings, down from 48.2x today. This future PE is greater than the current PE for the US Semiconductor industry at 30.1x.
• Analysts expect the number of shares outstanding to decline by 0.94% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.07%, as per the Simply Wall St company report.

NVIDIA Future Earnings Per Share Growth

Risks

• Growing regulatory and geopolitical uncertainties, especially related to US government restrictions on advanced chip exports to China and shifting license requirements, risk limiting NVIDIA's access to this large and rapidly growing market, directly impacting long-term revenue and top-line growth.
  
• Accelerating internal development of custom AI chips by major hyperscale cloud providers such as Google, Amazon, and Microsoft threatens NVIDIA's dominance, risking reduced pricing power, lower gross margins, and decelerating data center sales.
  
• Increased competitive pressure from both established players like AMD and Intel as well as specialized AI chip start-ups may drive pricing pressure, potentially eroding NVIDIA's average selling prices and compressing future earnings and operational margins.
  
• NVIDIA's high dependence on a concentrated product portfolio centered around GPUs for AI and data centers exposes it to potential cyclicality and rapid product obsolescence, which could increase revenue and net income volatility if AI workloads shift to alternative architectures.
  
• Persistent risks around global semiconductor supply chain fragility, including dependence on external foundries and component suppliers, make NVIDIA vulnerable to production disruptions and cost escalations, threatening consistent delivery and margin predictability.

Valuation

• The assumed bullish price target for NVIDIA is $261.85, which represents two standard deviations above the consensus price target of $206.72. This valuation is based on what can be assumed as the expectations of NVIDIA's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $270.0, and the most bearish reporting a price target of just $100.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $451.4 billion, earnings will come to $223.6 billion, and it would be trading on a PE ratio of 36.9x, assuming you use a discount rate of 10.1%.
  
• Given the current share price of $171.66, the bullish analyst price target of $261.85 is 34.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.