Key Points
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A new chip architecture could spur further growth.
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Nvidia has more information regarding 2027 AI spending than investors do.
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The stock is valued at a cheap price tag.
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Nvidia (NASDAQ: NVDA) currently trades at about $210 per share. However, I think there is a strong chance that Nvidia will top $300 per share before 2026 is over. That’s nearly a 50% rally to close the year, which is an incredible return for that time frame.
I’ve got three reasons that’s possible, and investors should load up on shares as a result.
1. The Rubin upgrade cycle is coming
Later this year, Nvidia’s latest architect, Rubin, will become available. This is a major advancement for Nvidia’s chips, and this architecture promises major improvements in cost-effectiveness. Inference can be done at a tenth of the cost, while training can be done at a fourth of the cost compared to previous-generation Blackwell chips. How investors should really read that is these units are far more efficient than predecessors, and they will be able to do a lot more with the same amount of Rubin computing clusters as they could with Blackwell.
This will help drive demand for new-generation chips, and it may be that upgrading older-generation chips (like Hopper) to new Rubin chips is due to major performance and efficiency gains. We’ll see how that pans out, but demand for Rubin chips is massive and will help spur future growth for Nvidia.
2. Nvidia has insider information regarding AI spending
While the term insider information may have a negative connotation to it, Nvidia is widely broadcasting some of this information. The artificial intelligence (AI) hyperscalers are likely placing orders for data center chips years in advance of when they need them, so they’re available when it’s time to install them in newly constructed data centers. So, when Nvidia tells investors that AI hyperscaler data center capital expenditures (capex) will exceed $1 trillion next year (up from $650 billion in 2026), investors should likely believe them.
That’s major growth for another year, and increased demand for computing units will help fuel Nvidia’s growth once again next year. With a strong 2027 expected, the stock could rally into the end of 2026, pushing it closer to the $ 300 per-share mark.
3. The stock is cheap
In reality, Nvidia’s stock is incredibly cheap for the performance it delivers. Nvidia trades for 24 times this year’s earnings but only 16 times next year’s earnings.
NVDA PE Ratio (Forward) data by YCharts.
If investors get confirmation regarding 2027’s spending plans from the AI hyperscalers, the stock could be primed to skyrocket before 2027 even arrives. For next year, Wall Street analysts project Nvidia’s earnings per share will reach $12.79. If Nvidia trades at 23.5 times next year’s earnings (the same price-to-earnings multiple it trades at today for this year’s earnings) as it enters 2027, that would price the stock at $300 per share.
So, a $300 per-share price target by the end of 2026 really isn’t a far-fetched idea for Nvidia; it’s just a by-product of meeting expectations and trading at a pretty reasonable valuation, given its growth rate and importance in the AI build-out. Furthermore, Wall Street has a pretty consistent history of underestimating Nvidia’s growth rate, which they’re probably doing again right now. They only expect 41% revenue growth next year, which doesn’t jive with Nvidia’s capex growth projection. If capex rises from $650 billion to $1 trillion, that’s 54% growth.
So, Nvidia’s price target should be far higher than $300 per share, but I think that gives investors a ton of wiggle room to seize major upside in the stock, and it’s a reason why Nvidia is among the best stocks to buy in the market now.
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Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
