JPMorgan reiterates NVIDIA Overweight and raises target price to $280

Overview

This is a JPMorgan company research and rating change report on NVIDIA Corporation. The core conclusion is that NVIDIA continues to lead in AI computing, data center networking, and broader AI infrastructure demand, with both F1Q27 results and F2Q27 guidance significantly above market expectations. The report reiterates an Overweight rating and raises the December 2026 target price from $265 to $280.

Core views

The report's core views are: first, data center demand remains strong, especially in networking, where performance is particularly notable, with InfiniBand growing roughly 4x year over year, indicating that NVIDIA networking content penetration in advanced AI clusters continues to rise. Second, the $1T+ revenue framework related to Blackwell and Rubin improves visibility into 2027. Third, Vera CPU could contribute about $20B of visible incremental revenue this calendar year, implying roughly 2.5 million to 4 million CPU shipments based on an overall ASP of about $5,000-$8,000 per CPU. Fourth, China data center computing revenue is still modeled at zero contribution, so meaningful progress on H200 licensing would represent additional upside.

Analysis framework

The report combines earnings review, management guidance interpretation, segment breakdowns, customer demand and supply chain checks, valuation multiple analysis, and risk scenario analysis. It focuses on comparing NVIDIA's actual results against consensus expectations, buy-side expectations, and forward guidance from management, while incorporating data center, networking, computing, edge computing, free cash flow, and capital return into the analysis.

Methodology notes

• Valuation methodsP/E multiple method

  The target price is based on exit CY26 annualized earnings power multiplied by a valuation multiple.

  JPMorgan assumes NVIDIA trades at 28x earnings, a multiple broadly consistent with its long-term EPS growth rate, and applies it to an exit CY26 annualized earnings power of about $10.00 to derive the $280 target price.

• Earnings analysisBeat-and-raise

  Results beat expectations and forward expectations are raised.

  The report emphasizes that both F1Q27 revenue and EPS exceeded market expectations, and F2Q27 revenue guidance also came in above expectations, leading to upward revisions to forward estimates and the target price.

• Segment analysisData center revenue breakdown

  Growth sources are broken down by computing, networking, hyperscale DC, AI clouds/industrial/enterprise, and other dimensions.

  The report views networking growth within data center revenue as a key source of the beat and notes that networking's share of data center revenue has risen to about 20%.

Asset mapping & comparison

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

• NVIDIA Corporation / US.NVDA

  Core covered name

  Strengths

  Strong leadership in AI computing, data center and networking businesses beating expectations, continued Blackwell demand, incremental TAM from Vera CPU, and improving free cash flow and capital returns.

  Weaknesses

  The valuation depends on continued high growth delivery; the initial supply chain ramp for Vera Rubin may be more gradual than Blackwell Ultra; China data center computing revenue is constrained by export restrictions.

  Comparison

  The stock chart shows NVIDIA significantly outperforming the S&P 500 re-based index; on the earnings side, revenue, EPS, and F2Q27 guidance all beat consensus.

  Risks

  PC gaming demand may be affected by macro uncertainty; if hyperscale customers adopt deep learning and GPU-accelerated data center applications more slowly than expected, revenue and earnings estimates face downside risk; intensifying competition could pressure NVIDIA's AI computing and data center growth or profitability; early ramp of components production and rack assembly for the Vera Rubin new architecture could be slower than expected; China data center computing revenue remains constrained by export restrictions, and H200 licensing progress is uncertain.

• Semiconductor and AI infrastructure supply chain

  Related beneficiary asset

  Strengths

  Capex growth from hyperscale cloud providers, AI cluster expansion, higher networking attach rates, and rising sovereign AI demand can support industry demand.

  Weaknesses

  Demand is highly dependent on the capex cycle of large customers, and ramp uncertainty may arise when the supply chain transitions to new architectures.

  Comparison

  NVIDIA's networking revenue growth outpaced computing revenue, showing that bottlenecks and value creation in AI infrastructure are shifting toward networking interconnects.

  Risks

  A slowdown in cloud capex, substitution by competitive ASIC/GPU solutions, and changes in regulation and export restrictions.

Key data

• Current price$223.47As of 2026-05-20.
• Target price$280.00December 2026 target price, raised from the prior $265.
• F1Q27 revenue$81.6BUp 85% year over year and 20% quarter over quarter, above consensus of $78.9B.
• F1Q27 EPS$1.87Above consensus of $1.77.
• F1Q27 gross margin75.0%Broadly in line with market expectations of 75.1%.
• F1Q27 data center revenue$75.2BUp 92% year over year and 21% quarter over quarter, above market expectations of $73.5B.
• F1Q27 networking revenue$14.8BUp 35% quarter over quarter and 199% year over year, accounting for about 20% of data center revenue.
• F1Q27 computing revenue$60.4BUp 18% quarter over quarter and 77% year over year, supported by demand for Blackwell 300.
• F2Q27 revenue guidance$91.0BThe midpoint is materially above market expectations of $86.4B.
• Visible incremental Vera CPU revenueAbout $20BBuilt from confirmed backlog and customer forecast demand, expected to be recognized this calendar year.
• Free cash flow$48.6BA record in F1Q27, above $34.9B in F4Q.
• Share repurchase authorizationNew $80B; available capacity $118.5BThe board approved an incremental buyback authorization.

Impact & implications

The report is positively skewed for NVIDIA shares: strong data center and networking demand, a higher F2Q27 revenue guide, new market opportunities from Vera CPU, and improved capital return together support the target price increase and Overweight rating. For the semiconductor and AI infrastructure chain, the report reinforces 2026-2027 growth visibility for AI training, inference, networking interconnects, server CPUs, and high-end rack supply chains.

Risks

• Macroeconomic uncertainty may weigh on PC gaming demand.
• If hyperscale customers adopt deep learning and GPU-accelerated data center applications more slowly than expected, revenue and earnings estimates face downside risk.
• Intensifying competition could compress NVIDIA's AI computing and data center growth or profitability.
• The initial ramp for components production and rack assembly related to the Vera Rubin new architecture may be slower.
• China data center computing revenue remains constrained by export restrictions, and progress on H200 licensing is uncertain.

What to watch

• More details in the June 1, 2026 Computex/GTC Taipei keynote on Vera CPU adoption, Groq/LPX integration, and the Vera Rubin ramp schedule.
• Whether actual F2Q27 revenue can meet or exceed the $91.0B midpoint of guidance.
• Whether the share of data center networking revenue and demand for InfiniBand and scale-up/scale-out continue to rise.
• Whether the roughly $20B of visible Vera CPU revenue this calendar year can convert as expected.
• Whether the H200 licensing program creates additional upside in China data center computing revenue.
• Whether the company returns roughly 50% of free cash flow to shareholders as management has promised.