Nvidia's AI Empire Valuation Hits Record Highs Despite Stock Lags

Nvidia's dominance in AI is undeniable, but its stock price has struggled to keep pace. Despite a record-breaking quarter where Data Center revenue more than doubled year-over-year, shares of NVDA (NASDAQ:NVDA) have only seen a 13.32% increase so far this year.

The company's Data Center revenue hit $89.02 billion last quarter, up 117% from the same period in the previous year. CEO Jensen Huang stated that AI has reached its inflection point and is now doing 'useful work' with 'productive and profitable tokens.' However, investors are concerned about a potential hyperscaler capex pause, extreme memory pricing, zero China Data Center compute revenue, and $279 billion in supply commitments.

Despite these concerns, Wall Street remains bullish on Nvidia. With 95% of analysts rating the stock as 'Strong Buy' or 'Buy,' the consensus target price is a significant $327.18, which implies a 55% upside from current levels. Our internal base case comes in at $306.02, with a bull case of $348.59 and a bear case of $258.47.

Reaching a price of $400 would require an 89.7% gain and a forward P/E of 38x. This is considered a stretch, but Nvidia's fundamentals are accelerating while its stock lags behind. With fiscal 2028 EPS revisions running 39 up and zero down over the past 30 days, analysts may be underestimating the company's growth potential.