Goldman Sachs has updated its stock projections for Nvidia, a prominent player in the AI chip sector, as the company's quarterly earnings announcement on February 25 approaches. The financial institution foresees Nvidia surpassing revenue expectations by approximately $2 billion for the fourth quarter. Analysts predict a fiscal fourth-quarter revenue of $67.3 billion, along with strong earnings per share. This positive outlook also extends to the first quarter, with revenue estimates positioned 8% above market consensus and EPS estimates 9% higher, signaling robust performance ahead.
Despite the encouraging forecasts, concerns linger regarding the extent to which a strong quarterly performance has already been incorporated into Nvidia's stock valuation. The market's attention is now gravitating towards the company's long-term guidance for 2026 and 2027. The significant boost in demand for Nvidia's GPUs, sparked by advancements in AI chatbots like OpenAI's ChatGPT since 2022, has driven the stock to new heights. However, with many portfolios now holding Nvidia shares, further substantial price increases might depend on sustained future growth and the successful rollout of new technologies such as the Vera Rubin chip.
Several factors could propel Nvidia's stock even higher, leading Goldman Sachs to set a price target of $250, a 35% increase from its February 6 closing price. These catalysts include accelerated capital expenditures by hyperscalers, potential upside in datacenter guidance beyond the current $500 billion target, and increasing demand from non-hyperscaler entities like OpenAI and sovereign governments. Furthermore, Nvidia's ability to maintain its competitive edge against ASIC and AMD through its CUDA technology, alongside a resurgence in demand from China following relaxed trade restrictions, and the successful deployment of the new Rubin chip in 2026, are all critical for future growth. Goldman Sachs projects impressive revenue and earnings per share growth through 2028, underscoring the company's significant market opportunity.
The path to increased revenue and profitability, if these projections hold, presents a considerable upside for share values. Nvidia's CEO, Jensen Huang, highlighted the profound shift in computing towards artificial intelligence, representing trillions in industry value. While the investment holds immense potential, it also comes with risks, including a potential slowdown in AI infrastructure spending, intensified competition leading to market share erosion, margin pressures, and supply chain disruptions. Investors should carefully consider these factors, but the underlying trend of technological advancement and the increasing integration of AI across industries suggest a promising future for companies at the forefront of this transformation. Embracing innovation and adaptability will be key to navigating the dynamic landscape of the technology sector and realizing sustained success.