Nvidia CFO Collette Kress told investors on the company's second-quarter earnings call that revenue will grow 70% next fiscal year. Wall Street hasn't fully priced in that guidance, and the resulting earnings math implies the stock could roughly double within two years.
Nvidia's chief financial officer guided investors to 70% revenue growth next fiscal year during the company's second-quarter earnings call. The forecast assumes a supply-constrained environment, a condition Fool analyst Keithen Drury says is likely given ongoing memory chip shortages and rising AI budgets. Drury also notes Nvidia has undershot its own projections in every period since the AI race began, suggesting 70% could mark a floor rather than a ceiling.
Wall Street analysts currently expect $9.31 in earnings per share for Nvidia this fiscal year. Because the company's earnings and revenue have historically moved together, Drury projects that 70% growth would push earnings per share to $15.83. Nvidia currently trades at 29 times earnings, a valuation multiple Drury describes as cheap relative to where the stock has traded over the past three years.
Applying that same 29-times multiple to the projected $15.83 in earnings per share would price Nvidia at nearly $460 per share. Nvidia trades for about $230 per share today, meaning the math points to the stock roughly doubling. Nvidia's market cap stands at $5.4 trillion, making it the world's largest company by that measure.
Drury argues the market hasn't priced in any of 2027's growth yet, which he calls a rare setup for investors weighing whether to buy in at current levels. The case rests entirely on management's own guidance holding up and Nvidia's earnings continuing to track its revenue growth as closely as they have in recent years.
Source: The Motley Fool
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