Nvidia (NVDA 1.55%) is one of the most intriguing companies in the market. It has delivered three straight years of market-crushing growth, which has propelled it to become the world's largest company. There's some skepticism about where Nvidia is headed over the next year, but I think it's going to be an overall positive year for Nvidia.
Multiple factors are adding to expectations that Nvidia will be a dominant stock in 2026, and I think the stock will be much higher by the end of the year.
Image source: Getty Images.
Data center buildouts are speeding up
Nvidia has been such a dominant performer because its artificial intelligence (AI) computing hardware, graphics processing units (GPUs), are the best available. Nvidia's hardware has been the base computing unit that many transformative generative AI technologies are built upon, and that isn't going to change anytime soon.
Nvidia's products are by far the most popular on the market and have even sold out all cloud GPUs. That's a big deal, and could explain why some alternative computing suppliers have done well as of late. There's still plenty of room to go around in the AI buildout, as the total pie is massive.
NASDAQ: NVDA
Key Data Points
Nvidia expects the global data center capital expenditure levels to reach $3 trillion to $4 trillion annually by 2030. That includes all data center capital expenditure components, such as land cost and construction, but computing hardware is by far the largest component. With 2025's expected total estimated to be about $600 billion, we're still a long way off from reaching that level. Furthermore, that's an annual figure, so this projection also indicates that we will reach new heights every year.
That bodes well for Nvidia's stock, making it a strong candidate to outperform the market in 2026.
Wall Street analysts project that Nvidia's revenue growth will total 50% in fiscal year 2027 (ending January 2027). That's impressive growth, but only if Nvidia's stock is fairly valued entering the year.
Nvidia should convert most of the revenue growth into stock price growth
A fairly valued stock will convert all its growth into stock price growth, so it's important to understand whether Nvidia is fairly valued or not. Currently, Nvidia trades for 25 times FY 2027 earnings, which isn't that expensive a price to pay.
NVDA PE Ratio (Forward 1y) data by YCharts.
The biggest question is whether Nvidia can continue growing beyond FY 2027. Nvidia's own projections, along with others, clearly state that it can. If projections look good for FY 2028, then Nvidia's stock price will likely rise alongside its growth, as there will be another year to justify a premium valuation. So, expecting Nvidia's stock to rise another 35% to 45% (to bake in some conservatism) isn't out of the question.
This is easily market-beating territory, and although it's not the incredible returns Nvidia was delivering in 2023 and 2024, it's still a great performance for an individual stock.
The only thing that can derail Nvidia over the next year is AI hyperscalers slowing down their spending. All of them have told investors to expect record-setting spending again in 2026, so this doesn't appear to be happening. The same issue will come up toward the end of 2026 for 2027 spending. If hyperscalers project that it will stay elevated, Nvidia's stock will soar. If they tell investors they are slowing down their spending, then Nvidia's stock will suffer.
Nvidia believes that there is growth for multiple years in this industry, and because it's currently sold out of GPUs, it's likely that its clients are placing orders years in advance. This gives Nvidia unprecedented visibility into the future, so if it thinks that this trend will persist through 2030, I'm inclined to believe it. As a result, I think Nvidia's stock will be much higher -- between 35% and 45% higher -- in 2026.
