Key Points
Nvidia (NASDAQ: NVDA) stock closed trading Friday at approximately $222 per share. Forecasting a $400 price tag within a year is an ambitious call, particularly given that Nvidia is already the world’s most valuable company by market capitalization. Nevertheless, the math supports this outlook, and recent remarks from CEO Jensen Huang lend further credibility to the thesis.
If Nvidia can genuinely deliver an 80% gain between now and the end of next year, it represents a compelling buy at current levels — few stocks are positioned to offer that magnitude of upside.
Image source: The Motley Fool.
Nvidia expects to double its chip sales next year
Recently, Huang told news media that he anticipates Nvidia will sell twice as many chips next year as in 2026. All else being equal, this would suggest the business doubles in size, and by extension, its valuation could follow suit. While the situation is certainly more nuanced, it is clear that the artificial intelligence (AI) infrastructure build-out is still in its early stages.
This outlook was reinforced by Chief Financial Officer Colette Kress, who projected 70% revenue growth during the company’s upcoming fiscal year on the earnings call. Nvidia’s own guidance has historically been conservative, and the company has consistently surpassed expectations quarter after quarter throughout the AI expansion. Huang, conversely, has a track record of making bold projections regarding future AI spending — his forecast that Nvidia will double chip sales year over year in 2027 likely sits at the higher end of analyst estimates.
Reality will probably land somewhere between these two perspectives, but if Nvidia is positioned to grow by anywhere from 70% to 100% next year, it qualifies as a straightforward buy. The AI race shows no signs of decelerating. As every company involved in the space continues to invest heavily in constructing AI data centers, Nvidia will remain one of the primary beneficiaries. Remarkably, given all of these advantages, the stock does not appear expensive.
Nvidia is a bargain right now
The price-to-earnings (P/E) ratio is among the most reliable valuation metrics for assessing fully mature, profitable companies. At less than 28 times earnings, Nvidia actually looks attractively priced.
NVDA PE Ratio data by YCharts.
The S&P 500 trades at roughly 25.1 times earnings, but the average S&P 500 constituent is not expected to double its business within a year. This highlights the key limitation of the trailing P/E ratio — it fails to factor in anticipated future growth.
However, investors can leverage forward earnings estimates to gauge where a stock may be headed. Currently, Nvidia trades at just 14 times next year’s estimated earnings.
NVDA PE Ratio (Forward 1y) data by YCharts.
If Nvidia delivers results in line with analysts’ consensus expectations, and the stock still trades at 28 times trailing earnings a year from now, the share price will have doubled — easily pushing it past the $400 threshold. Moreover, the company has a strong history of outperforming analyst estimates, so it would not be surprising to see the stock rise even further. With the AI boom accelerating, this appears to be an opportune moment to acquire Nvidia shares. Avoiding the stock simply because it has been highly successful in recent years would be a significant error, as it appears well-positioned to continue delivering market-beating returns with a favorable risk profile.