Nvidia earnings estimates raised 44% as hyperscaler capex climbs

Wall Street raised Nvidia's consensus earnings estimates to 44% annual growth over three years, up from 33% in March, as analysts lifted hyperscaler spending forecasts.

"Only Nvidia chips can handle any AI workload," Meera Pandit, global market strategist at J.P. Morgan, said. "Custom hardware is a safe and efficient bet for known workloads like inference, but there's an obsolescence risk as AI evolves."

Among 65 analysts, the median price target is $300, implying 37% upside from the current share price of $218. Nvidia controls about 90% of data center accelerator sales, according to HPC Wire, and is on pace to become the largest CPU supplier by the end of this year.

The revision follows Wall Street raising 2026 capital expenditure forecasts for the five largest hyperscalers — Alphabet, Amazon, Meta Platforms, Microsoft and Oracle — to $733 billion, up 90% from last year and double the $361 billion consensus in June. Goldman Sachs said capex growth exceeded 50% in both 2024 and 2025, versus consensus estimates of roughly 20% at the start of each year.

Nvidia generated $81.6 billion in revenue during its fiscal 2027 first quarter ended May 28, an 85% increase from a year earlier, with the data center segment contributing $75.2 billion, up 92%. The company guided second-quarter revenue to $91 billion, plus or minus 2%, a 95% increase, with Wall Street expecting $91.8 billion and GAAP earnings of $2.06 per share.

The company is scheduled to report results on Aug. 26, when investors will watch for an update on Vera Rubin systems, which Nvidia says can train AI models with 75% fewer GPUs than the Blackwell platform and cut inference token costs by 90%. Analysts expect the company to forecast about $103.1 billion in third-quarter revenue.

Nvidia shares closed at $224.09 on Aug. 12, up 3.03%, adding about $159 billion to its market capitalization, which stands at $5.4 trillion. The stock trades at 34.3 times trailing GAAP earnings, a 44% discount to its 10-year average of 61.6, and 23.7 times forward earnings based on fiscal 2027 estimates of $9.45 per share.

J.P. Morgan research shows 26% of hyperscaler capital expenditures flow directly to Nvidia's bottom line. Wall Street expects capex among the top five hyperscalers to grow 41% annually through 2028, roughly matching Nvidia's projected earnings growth of 44%.

The estimate revisions suggest analysts expect AI infrastructure demand to keep accelerating. Nvidia's Aug. 26 earnings report will test whether the company can beat the raised bar, with any guidance above $103.1 billion for the third quarter likely to extend the rally.

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