Piper Sandler initiated coverage on Nvidia with an Overweight rating and a $300 price target, arguing the chipmaker looks cheap against its own growth trajectory. The bullish case relies more on Nvidia hitting the firm's 47% revenue growth forecast through fiscal 2030 than on the market paying a richer multiple.
Piper Sandler analyst David O'Connor initiated coverage on Nvidia (NASDAQ: NVDA) on September 9 with an Overweight rating and a $300 price target, implying roughly 34% upside. The firm views Nvidia as the AI compute leader, controlling 80% of the market by value and an estimated 50% by units.
Nvidia Trades at 14 Times FY28 Earnings
Nvidia's second-quarter fiscal 2027 revenue reached $96.2 billion, up 106% year-over-year, while data center revenue surged 117% to $89 billion. GAAP gross margin came in at 75%, and adjusted diluted earnings reached $2.22 per share.
Against that backdrop, Piper's note says Nvidia trades near 14 times estimated fiscal 2028 earnings, one of the cheapest valuations in its AI universe, implying a PEG ratio of 0.3. The $300 target applies that same 14x multiple to calendar 2028 estimates, so the thesis leans on Nvidia delivering growth rather than on the market paying a richer multiple.
Supply Constraints Cut Both Ways
Piper Sandler believes AI compute supply will likely stay constrained for the next two to three years. That scarcity supports demand visibility, but it can also push suppliers to build capacity before every future sale is locked in, and Nvidia still has to execute on its annual product cadence as rivals try to reduce their dependence on its GPUs.
Nvidia's own filings show the trade-offs behind that scarcity. The company reported $985 million in quarterly provisions for inventory and excess purchase obligations, partly offset by releases. It also disclosed a first-half charge of about $400 million tied to H200 products amid China sales restrictions.
Piper's Bull Case Hinges on 47% Growth
Piper Sandler projects revenue growing at a 47% compound annual rate, with earnings climbing at a similar pace to $30 in fiscal 2030. At that pace, today's valuation looks inexpensive, but a meaningful slowdown in spending, execution, or profitability could make the 14x multiple less compelling.
Institutional positioning still leans bullish: 285 hedge funds held Nvidia at the end of the second quarter, up from 275 in the first quarter. Piper's call is therefore less a statement about AI demand and more a bet on whether Nvidia can keep compounding earnings at this rate.
Source: Insider Monkey
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