Nvidia Stock: Next Stop $246.85 Per Share?

Nvidia is trading at about 25x forward earnings near an all-time high, which the article argues is still reasonable given continued hyperscaler AI spending. It highlights $1 trillion in AI chip orders expected in 2026-2027 and notes that physical AI contributes less than 3% of revenue today, leaving additional upside from quantum computing, robotics, and self-driving applications. The piece is broadly constructive on Nvidia, though it warns the stock could fall sharply if AI spending slows.

Analysis

The market is re-rating NVDA on a simple but powerful second-order read: AI capex is no longer being treated as a one-off buildout, but as a recurring utility-like spend cycle. That matters because the bottleneck has shifted from chip demand to the throughput of the broader AI supply chain; as long as hyperscalers keep signing compute, networking, and custom silicon deals, NVDA benefits even when its own guide looks “fully appreciated.” The implied takeaway is that the next leg of upside is less about unit growth and more about elasticity of enterprise AI budgets over the next 6-18 months.

The underappreciated winners are the picks-and-shovels around the hyperscaler stack, especially TSM and AVGO. If AI spend remains resilient, TSM’s advanced-node capacity and CoWoS-type packaging tightness should stay pricing-supportive, while AVGO benefits from custom chip and networking design wins that are structurally stickier than merchant GPU demand. META, AMZN, and GOOGL are important because their willingness to keep investing acts as a demand floor for the entire ecosystem; this reduces the odds of a near-term capex air pocket, even if macro growth slows.

The contrarian risk is that the market is extrapolating linear AI adoption into nonlinear spend, while monetization is still lagging for most buyers. If AI ROI audits tighten over the next 1-2 quarters, hyperscalers could slow incremental orders without calling it a “cut,” which would compress the multiple before it hits reported revenue. For NVDA specifically, the stock can still underperform on any sign of digestion because expectations have moved to a regime where good execution is merely maintenance, not upside.

Physical AI and quantum are real long-duration options, but they are not near-term valuation drivers; they mainly extend the duration of the bull case rather than the earnings slope. The cleaner trade is to own the enabling infrastructure where today’s spend is already visible, while respecting that any broad AI capex pause would hit semis first and software later. In other words, the market is paying for endurance, but the timing risk is still concentrated in the next two reporting cycles.

Key Decisions for Investors

• Long NVDA on 3-6 month pullbacks, but size below max because upside now depends on capex durability rather than earnings surprises; best risk/reward is buying weakness toward support, not chasing highs.
• Pair trade: long AVGO / short NFLX for 2-4 quarters. AVGO has direct operating leverage to AI spend; NFLX has no AI capex beta and serves as a cleaner hedge against growth multiple compression.
• Overweight TSM versus NVDA for a 6-12 month horizon. TSM captures the manufacturing bottleneck and is less exposed to sentiment whipsaws if AI spend growth decelerates modestly.
• Add GOOGL or AMZN on any 10%+ drawdown tied to macro fears, not AI thesis damage. These names are the marginal demand stabilizers for the whole AI ecosystem and should outperform if capex stays intact.
• Use NVDA call spreads rather than outright stock if initiating new exposure now; the stock can grind higher, but implied upside is more likely to be capped by valuation and digestion risk over the next 1-2 quarters.