What happened
Analysts have revised consensus earnings estimates upward, now expecting Nvidia earnings to grow 44% annually over the next three years, up from a 33% estimate in March. This shift follows Wall Street's discovery that hyperscalers are spending far more on AI infrastructure than previously forecast — the consensus estimate for the top five hyperscalers' 2026 capex has more than doubled from $361 billion to $733 billion.
Why it matters
Nvidia controls about 90% of data center accelerator sales and has become the largest networking company globally, positioning it to capture roughly 26% of all hyperscaler capital expenditures. Since earnings growth should track capex growth if Nvidia maintains its pricing power, the upward capex revisions directly translate to stronger profit expectations — the median analyst target of $300 per share implies 37% upside from the current $218 price.
What to watch
The median analyst target price is $300 per share. Wall Street's track record of underestimating capex spending — actual capex exceeded 50% growth in both 2024 and 2025 despite initial forecasts of 20% — suggests consensus estimates for 2027 capex (28% growth to $939 billion) may also be too conservative, which could mean further upside revisions ahead.
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Nvidia's stock has surged 1,390% since the AI boom began in January 2023, yet Wall Street still sees upside. The key driver is a systematic pattern of underestimation: analysts initially forecast hyperscaler capex growth of roughly 20% for both 2024 and 2025, but actual growth exceeded 50% in both years. The same pattern has repeated in 2026 — last June's consensus estimate pegged top five hyperscaler capex at $361 billion, but the current estimate sits at $733 billion, a more-than-doubling revision. This underestimation matters directly to Nvidia because the company's earnings growth tracks capex growth; roughly 26% of hyperscaler capital expenditures flow to Nvidia's bottom line. With analysts now projecting capex growth of 41% annually through 2028 but historically underestimating each year, there is reason to believe Nvidia's consensus earnings growth forecast of 44% annually over the next three years may itself be conservative. Nvidia's dominance across GPUs (about 90% of data center accelerator sales), networking (now the largest player globally), and CPUs (on pace to lead by year-end) creates structural pricing power and ecosystem lock-in that makes custom silicon (ASICs) a less flexible alternative for most AI workloads.
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