NVIDIA: the toll road of the AI build-out
Data-centre demand is supply-constrained through FY2028, but at 18.2x our FY2028E EPS the stock already prices much of our base case. We initiate at Hold with a $252 target.
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Key takeaways
- Supply-and-capacity commitments reached $279B at July 2026, up from $119B a quarter earlier
- We model FY2028 revenue of $535B (+32%), less than half of management’s ~70% outlook
- NVIDIA has committed $30B to OpenAI and up to $10B to Anthropic; we take 10% off our multiple for this financing loop
- Initiate at Hold with a $252 target (bear $141, bull $377), 9.6% above the price
Investment thesis
Data-centre demand is supply-constrained through FY2028, and revenue per gigawatt is rising from about $18B (Hopper) to $25B (Blackwell) to $40B (Vera Rubin). We deliberately model FY2028 revenue of $535B (+32%), less than half of management’s ~70% outlook, and the financing loop with OpenAI and Anthropic caps the multiple.
Valuation
Our $252 target is 18x next-twelve-months non-GAAP EPS at the target date ($14.02): a Broadcom-anchored 20x less a 10% financing-loop discount. Bull is $377 and bear $141; our DCF ($164) sits below today’s price.
Our estimates
| Line | FY27E | FY28E | FY29E |
|---|---|---|---|
| Revenue | $404.8bn | $535.0bn | $625.0bn |
| Consensus | $411.3bn | $699.0bn | — |
| Ours vs consensus | −1.6% | −23.5% | — |
| EPS | $9.45 | $12.62 | $14.48 |
| Consensus | $9.28 | $15.77 | — |
| Ours vs consensus | +1.8% | −20.0% | — |
Risks to our view
- AI capex digestion, or disappointing returns on AI spending
- The financing loop: OpenAI and Anthropic stakes marked down, stretched receivables or neocloud distress
- Customer concentration: the top customer is 22% of revenue
- Custom silicon (TPU, Trainium, MI series) taking inference share and pressuring prices
- Upside risk: management’s ~70% FY2028 growth outlook lands, which supports our $377 bull case