Nvidia Stock Price Forecast - NVDA Sinks to $181 After Record $68B Quarter and $78B Guidance — Why Wall Street Is Wrong

Nvidia Stock (NASDAQ: NVDA) Forecast: $68 Billion Quarter, $97 Billion in Free Cash Flow, a 24.9x Forward P/E — and the Stock Is Down 5%. Here's Why the Selloff Is a Gift.

Nvidia (NASDAQ: NVDA) just delivered one of the most dominant earnings reports in the history of publicly traded companies — $68.1 billion in quarterly revenue, $43 billion in net income, $34.9 billion in free cash flow, and guidance for $78 billion next quarter that crushed consensus by $5.2 billion — and the stock dropped 5.5% on Thursday before shedding another 1.96% on Friday to $181.26. The world's most valuable publicly traded company, with a $4.40 trillion market cap, is now negative for 2026, trading within a $179.57-$182.59 range on Friday against a 52-week band of $86.63 to $212.19. The P/E ratio sits at 44.85. The dividend yield is 0.02%. And the average daily volume of 182 million shares suggests this isn't some illiquid meme stock being pushed around by retail — this is institutional capital making a deliberate choice to sell the single strongest earnings print in semiconductor history.

That choice is wrong. And the reasons behind it — sequential deceleration anxiety, stock-based compensation accounting noise, and philosophical discomfort with Nvidia's circular investment strategy — don't withstand scrutiny when measured against the actual numbers. At a forward P/E of roughly 24.9x on GAAP earnings and 22x on FY27 estimates, this is the cheapest Nvidia has been relative to its growth rate in over two years. The Vera Rubin platform ships in the second half of this year. Hyperscaler capital expenditure commitments approach $700 billion. The AI chip market is on a trajectory toward $1 trillion by 2030. Buy NVDA. The market is handing you one of the highest-quality businesses on the planet at a discount to the sector median, and the window won't stay open indefinitely.

The Q4 FY26 Numbers — $68.1 Billion in Revenue, $43 Billion in Profit, 75% Gross Margins

The fourth quarter of fiscal 2026 was a masterclass in execution at scale. Revenue of $68.1 billion represented a 73% year-over-year increase and a 20% sequential jump from Q3. To contextualize that number: $68.1 billion in a single quarter exceeds Nvidia's entire annual revenue from just two fiscal years ago. This isn't a company growing off a small base — this is a $216 billion annual revenue machine still expanding at rates typically reserved for pre-IPO startups.

Gross margin recovered to 75% in Q4, a 200 basis point year-over-year improvement that decisively addressed concerns about margin erosion during the Blackwell ramp. GAAP diluted earnings per share landed at $1.76, up 98% year-over-year. Non-GAAP EPS of $1.62 beat consensus by $0.08. Revenue topped estimates by $1.9 billion. For the full fiscal year 2026, revenue climbed 65% to $215.94 billion, operating income reached $130.4 billion, and net income surged 65% to $120.1 billion. Annual diluted EPS came in at $4.77, roughly 1.58% above the Street's expectations. By every conceivable financial metric, this was a comprehensive beat.

Data Center Revenue Hits $62.3 Billion — Nvidia Is No Longer a Chip Company

The Data Center segment generated $62.3 billion in Q4 revenue, up 75% year-over-year and representing over 91% of total sales. The days when Gaming drove Nvidia's narrative are finished. Anyone purchasing NVDA shares today is buying a data center infrastructure company — one that has become the foundational layer upon which the entire global AI ecosystem operates.

Within Data Center, the networking sub-segment demands particular attention. Quarterly networking revenue surged to $11 billion — roughly 20% of compute revenue at $51.3 billion — and grew more than 3.5x compared to the same period last year. For the full year, networking exceeded $31 billion, up more than 10x from FY21 when Nvidia closed the Mellanox acquisition. CEO Jensen Huang didn't mince words on the conference call: Nvidia is now the largest networking company in the world, and likely already the biggest Ethernet networking company globally. The NVLink chip-to-chip interconnect technology has transformed Nvidia from a GPU vendor into a complete system and rack-scale solution provider — and those integrated systems command significantly higher pricing than standalone accelerators.

Sovereign AI and Customer Diversification — The Moat Nobody Talks About

The customer concentration risk that dominated bear theses for the past two years is quietly dissolving. While hyperscalers still account for approximately 50% of Data Center revenue, the other half now comes from enterprises, AI model developers, and — crucially — sovereign governments building national AI infrastructure. Sovereign AI revenue was essentially zero two years ago. In FY26, it exceeded $30 billion, more than tripling year-over-year. That's not a rounding error — that's a $30 billion revenue stream that didn't exist 24 months ago, generated by governments around the world that have concluded AI capability is a matter of national security. Nvidia is no longer captive to the spending cycles of five or six mega-cap technology firms. The market hasn't fully priced in how dramatically that diversification reduces risk.

$78 Billion Q1 Guidance Crushed Consensus by $5.2 Billion — And It Excludes China

Nvidia guided first quarter FY27 revenue to $78 billion, plus or minus 2%. The Street was expecting $72.6-$72.8 billion. That $5.2 billion beat on guidance alone is larger than most companies' entire quarterly revenue. The implied year-over-year growth rate is approximately 77% — an acceleration from the 73% growth in Q4. And here's the detail that makes the guidance even more remarkable: management explicitly stated the $78 billion figure assumes zero data center revenue from China. Given current export control restrictions, that's a prudent assumption — but it also means any eventual Chinese revenue would represent pure incremental upside to an already jaw-dropping forecast.

The sustainability question — whether AI capital spending is a bubble or a secular shift — gets partially answered by the hyperscaler capex commitments now on record. The top five cloud providers have projected approximately $660-$700 billion in aggregate capital expenditure, with Amazon (AMZN) alone planning to spend upwards of $200 billion in 2026. On Thursday, Amazon committed $50 billion to OpenAI's $110 billion funding round at a $730 billion valuation, with Nvidia and SoftBank each contributing $30 billion. The capital being deployed into AI infrastructure is accelerating, not decelerating — and every dollar of hyperscaler capex flows disproportionately through Nvidia's architecture.

Free Cash Flow of $97 Billion — And Why Management's Capital Allocation Is the Stock's Biggest Problem

Nvidia generated $34.9 billion in free cash flow during Q4 alone — a 51.3% free cash flow margin on revenue. For the full fiscal year 2026, FCF reached $97 billion. On a per-share basis (using the 24.514 billion average diluted count at year-end), that equates to approximately $3.96 of free cash flow per share annually, or $1.42 per share in Q4 alone.

And this is where the frustration starts. Despite generating what may be the largest annual free cash flow figure in corporate history, Nvidia returned only $41 billion to shareholders through buybacks and dividends across the full year — roughly 42% of FCF. In Q4 specifically, shareholder returns totaled just $4.1 billion on $34.9 billion of FCF — an 11.8% return rate. The vast majority went to buybacks, because the dividend sits at an almost comically small $0.01 per share quarterly ($0.04 annually) — a token payment that exists solely so investment funds with dividend mandates can check a compliance box.

The share count tells the story of how inadequate the buyback program really is. Year-end FY26 average fully diluted shares came in at 24.514 billion versus 24.804 billion at year-end FY25 — a reduction of just 1.2%. For a company printing $97 billion in free cash flow, that's embarrassing. The buybacks are barely keeping pace with stock-based compensation, which totaled $6.386 billion in FY26, up 34.8% year-over-year. Beginning in Q1 FY27, Nvidia will include SBC in its non-GAAP financial measures — a cosmetic change that doesn't alter the fundamental dilution problem but did create confusion in guidance optics, with non-GAAP operating expenses guided to $7.5 billion (including $1.9 billion of SBC) versus $3.6 billion in the prior-year quarter. That 100% year-over-year increase in reported opex spooked the market, even though the underlying organic increase is closer to $2 billion against $34 billion in revenue growth.

The $70 Billion Circular Financing Question

Nvidia spent $70 billion in FY26 on corporate deals with companies including OpenAI, CoreWeave (CRWV), and others to fuel GPU orders — more than double the prior year's investment. The strategy is transparent: Nvidia provides financing to customers, who then use that capital to purchase Nvidia hardware. It is, by any honest assessment, circular financing, and the parallels to Cisco Systems' vendor financing practices in the late 1990s before the dot-com collapse have been noted by multiple institutional observers.

When UBS analyst Timothy Arcuri directly confronted this issue on the earnings call — pointing out that Nvidia is generating roughly $100 billion in cash but the stock hasn't moved in six months, and asking why the company doesn't announce a massive share repurchase — CFO Colette Kress deflected. Her response emphasized "supporting the extreme ecosystem" while vaguely promising to "continue to find the right unique opportunities" for buybacks. That non-answer was the moment the selloff became inevitable. Nvidia's management is effectively telling shareholders: we'd rather loan $70 billion to our customers to create demand for our products than buy back $70 billion of our own stock or pay a meaningful dividend. Whether that's visionary or reckless depends on whether AI infrastructure demand proves durable or cyclical — but it's easy to understand why the market is demanding more proof before rewarding the stock.

The Broadcom Comparison — Why AVGO Does It Right and NVDA Doesn't

Broadcom (AVGO) has averaged 10% annual dividend increases for years. Over the past decade, AVGO has grown its dividend at a compound annual rate of 30%. The current annual payout of $2.60 per share (post the 2024 10-for-1 split) represents a 0.78% yield — not headline-grabbing, but for long-term holders who accumulated shares over the past five to ten years, the yield on cost is extraordinarily attractive. Broadcom has managed this while simultaneously investing aggressively in growth, running a robust stock-based compensation program, and executing significant buyback plans. At no point has Broadcom felt compelled to loan billions to its customers to sustain demand for its chips.

That contrast cuts to the heart of the market's skepticism about Nvidia. If Jensen Huang is as confident in sustained AI demand as his conference call commentary suggests — he told CNBC the computing industry's total addressable market is far larger than the market appreciates — why does the company need to finance customer purchases at all, let alone at $70 billion annually? And why can't it simultaneously fund a $50-$100 billion buyback authorization and declare a dividend policy that reflects even a fraction of its free cash flow power? A $0.10 quarterly dividend ($0.40 annually) would consume only about 10% of FY26 free cash flow. Google (GOOG), Microsoft (MSFT), and Broadcom have all demonstrated that elite growth companies with massive FCF profiles can and do pay meaningful dividends while still investing aggressively in the future. Nvidia's $0.04 annual dividend on $3.96 of free cash flow per share is indefensible.

Vera Rubin — The Catalyst That Could Break the Sideways Trap

If there is a single factor that will determine NVDA's trajectory over the next 12-18 months, it's the Vera Rubin platform. CFO Kress confirmed on the Q4 call that Nvidia shipped its first Vera Rubin samples to customers earlier this week and remains on track for production shipments in the second half of 2026. Vera Rubin is the successor to the current Grace Blackwell architecture — a complete rack-scale AI system designed for deployment as a single integrated unit.

The performance claims are significant. Next-generation Rubin GPUs are expected to deliver superior performance per watt compared to Blackwell predecessors, with management citing up to a 10x reduction in inference cost relative to Blackwell. Inference — the process by which AI models respond to queries in production — represents one of the largest ongoing expenses for companies operating AI applications at scale. A 10x cost reduction would fundamentally alter the economics of AI deployment, making previously marginal use cases suddenly viable, and could trigger a massive upgrade cycle even among customers whose existing Blackwell infrastructure is performing well.

The backlog validates the demand picture. Kress stated that Nvidia expects to surpass the previously announced $500 billion in chip orders across calendar 2025-2026, with inventory and supply commitments in place to support shipments extending into calendar 2027. If Vera Rubin ships on schedule and early production overlaps with still-strong Blackwell demand, Nvidia would be running two simultaneous high-demand product cycles — a pattern that occurred during the Hopper-to-Blackwell transition and generated enormous revenue outperformance. That dual-cycle scenario is what supports the $78 billion Q1 guide and could spark the catalyst that finally pulls the stock out of its six-month sideways grind.

The HBM Supply Constraint — The One Risk That Actually Matters

Demand isn't the risk. Supply is. Every Nvidia AI accelerator requires High Bandwidth Memory, and global HBM production is concentrated in just three companies: Micron (MU), Samsung, and SK Hynix. Current allocation is fully committed through the end of this year, and supply tightness could extend into 2027. Kress acknowledged the constraint directly, noting that Gaming segment supply will be "very tight" for "a couple of quarters" and that any improvement by year-end would create opportunities for year-over-year growth.

The practical implication: HBM supply could cap how many Vera Rubin systems Nvidia can actually ship in the second half. Billions in potential revenue could shift from FY27 into FY28 — not lost, but delayed. That distinction matters enormously for valuation but not for the long-term thesis. HBM is a higher-margin product that manufacturers have strong economic incentive to produce at maximum capacity. The constraint is real but temporary, and every memory producer on earth is racing to expand capacity to capture Nvidia's demand. Don't confuse a supply bottleneck with a demand problem — they're opposite signals dressed in similar short-term price action.

Valuation — 22x FY27 Earnings, Below Sector Median, and a Path to $1 Trillion in Revenue

The numbers that matter most for positioning are these: Nvidia's forward P/E on GAAP earnings sits at approximately 26.9x — roughly 9% below the semiconductor sector median of 29.6x. On a non-GAAP FY27 basis, the multiple drops to about 22x on consensus EPS estimates of $8.25. By FY29, with analyst targets at $13.10 in earnings per share, the stock trades at less than 15x. Let that register: the most dominant technology franchise of the current decade, growing revenue 65-77% annually, trading below 15x earnings two years out.

Among the Magnificent Seven, only Microsoft trades at a lower forward P/E (23.3x). Meta Platforms (META) commands 22.1x but against a sector median of 16.2x — a 37% premium. Alphabet (GOOG) at 27.2x and Amazon (AMZN) at 27.2x both trade at 50%+ premiums to their respective sector medians. Apple (AAPL) sits at 32.2x. Tesla (TSLA) at 293.4x is in its own universe entirely. Nvidia, by this lens, is the cheapest high-growth mega-cap in the market relative to where its peers trade.

Consensus revenue estimates project $360 billion for FY27 and $551 billion by FY29. The AI chip market is forecast to reach $1 trillion by 2030, with Nvidia commanding 60-65% market share — roughly $600-$650 billion in annual sales. The GPU segment alone is projected at $750 billion, with AMD (AMD) and Broadcom splitting the remainder alongside custom silicon from Marvell (MRVL) and others. At 65% operating margins (800 basis points below current levels as a conservative haircut), $650 billion in revenue translates to approximately $14.66 in EPS — making the stock trade at roughly 12.4x on that scenario. Even at compressed 60% margins, the earnings power is massive and the multiple is historically cheap for a company of this quality.

Why the Stock Dropped — Sequential Deceleration Anxiety Is Misplaced

The mechanical explanation for the selloff is sequential revenue deceleration. Data Center revenue grew 22% quarter-over-quarter in Q4, down from 25% sequential growth in Q3. The Q1 FY27 guidance implies roughly 15% sequential growth — another step down. For a stock that had been priced for perpetual acceleration, any moderation in the rate of improvement triggers algorithmic selling and momentum unwinds.

But sequential deceleration is not demand deterioration. Year-over-year growth is actually accelerating at 77%. The business didn't weaken in any material way. The quarterly comparison simply reflects the mathematical reality that each incremental billion becomes a smaller percentage of an ever-larger base. Going from $51 billion to $62 billion is 22%. Going from $62 billion to $72 billion would be 16%. The absolute dollar growth is similar; only the percentage looks smaller. Confusing percentage deceleration with fundamental weakness is one of the most common analytical errors in growth stock investing — and right now, the market is making that error with Nvidia at scale.

Wall Street's rating consensus remains overwhelmingly bullish: Strong Buy at 4.68 from sell-side analysts, Buy at 3.76 from independent analysts, with the quant rating at Hold (3.44). Short interest sits at just 1.06% — negligible for a $4.4 trillion market cap company and a signal that even dedicated bears can't construct a credible short thesis against the fundamentals.

The Verdict — NVDA Is a Buy at $181. The Market Is Wrong.

Strip away the noise — the SBC accounting change, the sequential deceleration math, the circular financing debate — and what remains is the highest-quality semiconductor business ever built, generating $97 billion in annual free cash flow, growing revenue at 65-77%, guiding to $78 billion next quarter with zero China exposure baked in, trading at 22x next year's earnings and below 15x FY29 estimates, with a $500 billion+ order backlog, a Vera Rubin upgrade cycle launching in six months that could deliver 10x inference cost improvements, and a total addressable market heading toward $1 trillion by decade-end.

The capital allocation problem is real but solvable. A $50-$100 billion buyback authorization or a meaningful dividend policy shift would re-rate the stock overnight. Jensen Huang and CFO Kress have the tools to fix the market's perception — they just haven't chosen to use them yet. That's frustrating, but it doesn't change the underlying value proposition. The stock has gone nowhere for six months while the business has continued to accelerate. That divergence between price and fundamentals is the definition of a buying opportunity.

Buy NVDA at $181. Scale into the position in tranches — the stock could test $175 or even $170 if broader market weakness persists through early March, and those levels would represent even more compelling entry points. Target a full position by mid-March ahead of the Vera Rubin production ramp timeline. The FY27 EPS estimate of $8.25 at a 30x multiple — still below the sector median growth premium — implies a $247 price target. At a 25x multiple (where the stock trades today), $8.25 in earnings gives you $206. Either way, the upside from $181 is substantial, and the downside is backstopped by $97 billion in free cash flow, 68% operating margins, and the most defensible competitive moat in technology. The market is stuck in the mud on Nvidia. The fundamentals are not. That gap closes — it's only a question of when.

That's TradingNEWS