Goldman Sachs Raises NVIDIA Target Price to $250, Bullish on Data Center Prospects

Overview

This report is Goldman Sachs' preview analysis of NVIDIA Corp.'s (NVDA.US) first-quarter results, focusing on the long-term growth potential of its data center business and the new opportunities brought by agentic AI. Goldman Sachs raised NVIDIA's revenue and EPS forecasts and reiterated the buy rating, setting a target price of $250 with an implied upside of around 49%.

Core views

Goldman Sachs expects NVIDIA's Q1 revenue to exceed market expectations by $2 billion, with the data center business performing particularly strongly. The report notes that NVIDIA set a goal at GTC 2026 to achieve $1 trillion in data center revenue within the next three years, a guidance that could be further revised upward. Additionally, the development of agentic AI is expected to drive growth in the server CPU business. Goldman Sachs raised NVIDIA's FY27E revenue and EPS forecasts, which are 14% and 34% above market consensus, respectively. Although the current stock price is significantly discounted compared to historical averages, Goldman Sachs believes that if NVIDIA can demonstrate improved profitability and growing demand from non-traditional customers, its valuation could see a re-rating. Key drivers include: - Continued growth in the data center business, especially contributions from the Blackwell and Rubin platforms; - The positive impact of agentic AI on the CPU business; - Potential demand from non-hyperscale customers such as OpenAI and Anthropic; - Competitiveness in the custom silicon chip sector.

Analysis framework

Goldman Sachs conducted its analysis through the following steps: 1. Compared NVIDIA management guidance with market expectations to assess the extent of Q1 outperformance. 2. Analyzed the long-term growth potential of the data center business, particularly the credibility of the $1 trillion revenue guidance. 3. Examined the impact of agentic AI on the CPU business and evaluated the potential for market share shifts. 4. Considered trends in non-traditional customer demand, including sovereign AI customers and emerging cloud service providers. 5. Integrated gross margin, competitive landscape, and other factors to arrive at earnings forecasts and valuation conclusions. The report adopted a bottom-up approach, combining industry supply-and-demand data with NVIDIA's product roadmap to build a detailed financial model.

Methodology notes

• Valuation MethodPE Valuation

  Using a 30x PE multiple to calculate the target price.

  Goldman Sachs applied a 30x PE multiple based on standardized EPS forecasts to arrive at a target price of $250. This method is suitable for growth-oriented tech companies and reflects future earnings potential.

• Industry/Supply-Demand FrameworkSupply-demand framework

  Analyzing supply-and-demand dynamics in the data center industry.

  The report compared supply-side data (such as TSMC and SK Hynix earnings reports) with demand-side data (such as U.S. hyperscale customers' capital expenditure plans) to evaluate NVIDIA's market position and growth prospects.

• Cycle and Sentiment FrameworkInventory Cycle

  Considering the impact of rising memory and other input costs on gross margins.

  The report analyzed cost pressures amid inflation and predicted that NVIDIA would maintain a median gross margin of 70% in H2 2026.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NVIDIA CORP (NVDA.US)

  Core asset benefiting from data center growth and agentic AI development.

  Strengths

  Leading GPU technology, strong product roadmap, broad customer base.

  Weaknesses

  Facing competitive pressure in custom silicon chips, gross margins potentially affected by rising input costs.

  Comparison

  Compared to peer AMD, NVIDIA has a higher market share in the data center space, but needs to watch out for AMD's catch-up.

  Risks

  Slowing AI infrastructure spending, loss of market share, declining gross margins, supply chain constraints.

Key data

• Total Revenue$80.046 billion (FY27E)Goldman Sachs' forecast, 2% above market consensus.
• Earnings Per Share$1.86 (FY27E)Goldman Sachs' forecast, 7% above market consensus.
• Data Center Revenue$74.667 billion (FY27E)Goldman Sachs' forecast, 3% above market consensus.
• Gross Margin74.8%Forecast excluding SBC, slightly below the market consensus of 75.0%.

Impact & implications

Goldman Sachs believes NVIDIA's stock price will benefit from upgraded earnings forecasts and valuation repair over the next 12 months. Although the current stock price is significantly discounted compared to historical averages, if NVIDIA can prove improved profitability and growing demand from non-traditional customers, its valuation could see a re-rating. Meanwhile, the development of agentic AI could become a new catalyst, driving growth in the CPU business.

Risks

• Slowing growth in AI infrastructure spending.
• Loss of market share due to intensified competition.
• Declining gross margins due to competitive pressures or rising costs.
• Supply chain constraints could affect product delivery.

What to watch

• Capital expenditure plans of hyperscale customers.
• Adoption rate of agentic AI and its impact on enterprise workloads.
• Trends in demand from non-traditional customers.
• Competitive dynamics in the custom silicon chip sector.