If there has been one narrative that has driven the stock market over the past few years -- for better or for worse -- artificial intelligence (AI) wins hands down. Some companies have enjoyed blistering runs higher, while others have fallen victim to the so-called "software apocalypse," as fears of AI disruption have sent many software stocks plummeting.
No one would argue that Nvidia (NVDA 1.53%) has benefited from these secular tailwinds, as the company's graphics processing units (GPUs) have underpinned the AI revolution, sending its stock price up 1,130% since early 2023. Some investors fear the stock's epic run is nearing its end, but not everyone is convinced.
One Wall Street analyst just argued that there are additional gains ahead for Nvidia investors, with the company's market cap on track to soar to $7 trillion over the coming year or so.
Image source: Getty Images.
Show me the money
Just last week, Nvidia reported the results of its fiscal 2026 fourth quarter (ended Jan. 25), and the company delivered on every metric that matters. Revenue of $68 billion grew 73% year over year (and 20% quarter over quarter), as its sales continued to accelerate. This drove adjusted earnings per share (EPS) up 82% to $1.62, fueled by a gross margin of 75%. The results were well ahead of analysts' consensus estimates of $66.2 billion in revenue and $1.54 in EPS.
On the heels of its blockbuster performance, Wedbush analyst Matt Bryson maintained an outperform (buy) rating while raising his price target on Nvidia to $300. For those keeping score at home, that represents potential upside for investors of 67% compared to Tuesday's closing price.
The analyst pointed out that, despite the law of large numbers, Nvidia continues to deliver growth acceleration usually reserved for much smaller companies. To that point, Nvidia's data center segment grew revenue 75% year over year (and 22% sequentially) to $62.3 billion. Perhaps more telling is Nvidia's first-quarter revenue guidance of $78 billion, which would represent year-over-year growth of 77%. Finally, Bryson suggests that Nvidia's tendency to issue conservative guidance is well-documented and believes the company has additional upside beyond its published forecast.
I think the analyst hit the nail on the head. Nvidia has exceeded revenue and EPS expectations in eight of the past nine quarters, underscoring management's conservative leanings.
NASDAQ: NVDA
Key Data Points
If Nvidia's stock price hits $300 over the next 12 to 18 months, that would push the company's market cap to just short of $7.3 billion.
CEO Jensen Huang has previously gone on record estimating that data center infrastructure spending will reach $1 trillion annually by 2028. Analysts at Bernstein have run the numbers and suggest that Nvidia captures nearly 30% of all AI data center spending as pure profit. If those estimates are even close, that suggests $300 billion in profit potential -- which dwarfs the $120 billion in net income Nvidia booked in fiscal 2026.
Taken together, I see a mathematical path for the company to clear a $7 trillion market cap over the next couple of years. Furthermore, at just 22 times forward sales, the stock is reasonable priced.
That's why I think Nvidia stock is a buy.
