Nvidia (NVDA +4.30%) stock has been on a bumpy ride this year, dropping 30% in the first quarter of 2025 before staging a remarkable recovery over the next few months. And now, the stock is once again in pullback mode.
Shares of Nvidia are down 13% since hitting a 52-week high on Oct. 29. Even a solid set of quarterly results and better-than-expected guidance were not enough to give the stock a boost. Does this point toward difficult times for Nvidia in the coming year?
Image source: Nvidia
Analysts expect Nvidia stock to jump higher in the coming year
Nvidia carries a 12-month median price target of $225, as per 71 analysts covering the stock. That suggests a potential jump of 25% from current levels. What's more, 92% of the analysts covering Nvidia rate it as a buy.
Clearly, analysts are positive about Nvidia stock's direction in the coming year. However, the recent pullback suggests that investors don't share that sentiment. Worries about a potential artificial intelligence (AI) bubble, the sustainability of the high spending on AI infrastructure, and sky-high valuations among AI-related stocks have all contributed toward a broader pullback in tech stocks.
This explains the slide in shares of Nvidia of late. However, it may not take long for this tech stock to step on the gas once again. That's because Nvidia continues to deliver solid financial performance, and it has enough fuel in the tank to sustain healthy growth levels in the coming year.
As a result, don't be surprised to see the stock actually hitting, or exceeding, the median price target discussed above. Let's see why that's likely to be the case.
Here's how much upside investors can expect from this AI giant
Nvidia is on track to end the ongoing fiscal year 2026 (which will end toward the end of January 2026) with almost $213 billion in revenue. That points toward a 63% jump in its top line from the previous fiscal year. Analysts expect Nvidia's top-line growth to slow down to 47% in the next fiscal year to $313 billion.
However, Nvidia can do better than that. That's because the company's purchase commitments for 2025 and 2026 stand at a whopping $500 billion, driven by the rapidly growing demand for its AI chips. Of that, Nvidia has yet to fulfill $350 billion worth of orders. Even if we assume that Nvidia doesn't receive any more orders (which is unlikely, as it continues to win sovereign business from countries such as Saudi Arabia), it can still achieve a substantial jump in data center revenue.
The data center business accounted for almost 90% of Nvidia's top line last quarter. Assuming a similar proportion is maintained throughout the year, then its fiscal 2026 data center revenue will land at $192 billion (based on the $213 billion revenue estimate). So, if Nvidia manages to convert all of its order backlog into revenue in the next fiscal year, its data center revenue could land somewhere around $290 billion (since the company is expected to fill almost $60 billion worth of orders in the current quarter).
NASDAQ: NVDA
Key Data Points
Importantly, Nvidia is working toward converting that sizable backlog into revenue. It increased its inventory by 32% in fiscal Q3 from the previous quarter. That was higher than the 22% sequential increase in its quarterly revenue. Even better, Nvidia pointed out that its supply commitments increased at a much stronger pace of 63%.
So, there is a good chance that Nvidia could actually achieve the growth that analysts expect from it next year. However, don't be surprised to see the company's backlog become bigger in 2026 and help it deliver better-than-expected growth. That's because the spending on data center AI infrastructure continues to increase at a robust pace, with Nvidia forecasting a 40% annual growth rate in this market over the next five years.
But even if the company manages to hit the $7.43 per share in earnings that analysts expect in the next fiscal year, its stock price could jump to $238 (based on the tech-laden Nasdaq-100 index's earnings multiple of 32). That points toward a potential jump of 32% in this AI stock. Given that Nvidia can be bought at just 23 times forward earnings right now, investors are getting a good deal on this chip giant, which they should not miss, considering the healthy upside it can clock in the coming year.
