Wall Street raises Nvidia earnings forecast to 44% annual growth

Nvidia shares have climbed 1,390% since the artificial intelligence boom began in January 2023, and Wall Street analysts still believe the stock is undervalued. Among 65 analysts surveyed, the median target price is $300 per share, implying 37% upside from the current price of $218. The catalyst for recent optimism is a substantial upward revision to earnings forecasts. Consensus estimates now project Nvidia earnings will grow 44% annually over the next three years — a significant jump from March's consensus estimate of 33% annual growth.

What drove this revision is Wall Street's realization, once again, that it has underestimated hyperscaler spending on AI infrastructure. According to Goldman Sachs, at the start of both 2024 and 2025, consensus estimates implied capex growth of roughly 20% for each year, but actual capex growth exceeded 50% in both years. The same pattern has emerged in 2026: last June, the consensus estimate forecast that the five largest hyperscalers — Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle — would spend $361 billion on capex in 2026. Wall Street has since raised that forecast by over 100%, such that the current consensus estimate now stands at $733 billion for 2026. Similarly, the 2027 forecast predicts capex growth of 28% to $939 billion, though this would represent a significant slowdown compared to the 56% growth in 2024, 73% in 2025, and the projected 90% growth for 2026.

Nvidia's earnings growth is expected to track this capex spending because the company captures approximately 26% of hyperscaler capital expenditures — a metric that underscores Nvidia's essential role in the AI infrastructure market. Wall Street analysts currently expect capex spending among the five largest hyperscalers to grow 41% annually through 2028, while consensus estimates say Nvidia earnings will increase 44% annually over the same period. Nvidia dominates this market through a full-stack accelerated computing approach: the company produces graphics processing units (GPUs), central processing units (CPUs), and networking equipment, supported by a robust software ecosystem. Nvidia GPUs account for around 90% of data center accelerator sales, the company recently became the largest networking company in the world, and it is on pace to become the largest CPU supplier by year-end. While some investors worry that custom application-specific integrated circuits (ASICs) could displace Nvidia, Meera Pandit, global market strategist at J.P. Morgan, argues that "Nvidia isn't going anywhere anytime soon," noting that custom hardware has an obsolescence risk as AI evolves and only Nvidia chips can handle any AI workload. The implication for investors is that if Wall Street's track record of underestimating hyperscaler capex spending continues — as the data suggests is plausible — then current Nvidia earnings forecasts may also be conservative, potentially driving further stock appreciation.