• Wolfe Research adds Nvidia (NVDA) to its Alpha List, citing a compelling valuation at 23x 2026 EPS estimate, below the 5-year average of 35x.
  • The firm projects FY28 EPS around $11.50—$1.50 above consensus—yielding an attractive 16x forward multiple, with a price target raised to $275 from $250.
  • Strong fundamentals are driven by AI tailwinds, next-gen product ramps like Rubin, and rack-scale systems, despite recent stock underperformance due to seasonal trends.

Nvidia's Valuation Reaches Attractive Levels

Wolfe Research has added Nvidia to its Alpha List, calling the chipmaker's stock "very attractive" at current levels, according to analyst Chris Caso. The move comes as Nvidia trades at 23 times its 2026 earnings per share estimate, significantly below its five-year average multiple of 35x. Wolfe maintains an Outperform rating on the shares, raising its price target to $275 from $250, based on robust long-term growth prospects in artificial intelligence.

"We see the valuation as compelling again, with fundamentals intact despite recent consolidation," said a person familiar with Wolfe's analysis. The firm projects fiscal year 2028 EPS around $11.50, which is $1.50 above the current consensus estimate, putting Nvidia at an attractive 16x forward multiple. This reinforces its Alpha List status, with the stock viewed as a top pick for 2026.

AI-Driven Growth and Product Ramps

Nvidia's growth is fueled by AI-driven demand, with Wolfe forecasting more than $40 billion in upside to calendar year 2026 revenue. The company's data center segment, a key driver, is expected to see significant expansion, with rack-scale systems like the GB200 NVL72 and GB300 NVL72 boosting average selling prices and units. Analysts highlight the upcoming Rubin chip launch in the second half of 2026, which promises a fivefold improvement in inference performance, as a major catalyst.

"The fundamentals remain strong, with AI tailwinds and next-gen product ramps supporting beyond-consensus earnings," noted an industry insider. Wolfe sees limited high-end competition despite custom chips from players like Google, with Nvidia's performance edges sustaining gross margins around 75%. The firm projects data center revenue could escalate to over $450 billion in 2027, driven by 55,000 Blackwell and 20,000 Rubin racks, translating to approximately 7.2 million data center GPUs, a 35% year-over-year increase.

Market Context and Analyst Sentiment

Nvidia's stock has risen 36% over the past year but has underperformed peers recently due to Blackwell delays, AI spending concerns, and competition fears. However, Wolfe attributes this to seasonal trends, dismissing any material impact on the bullish outlook. "Seasonal trends may explain recent underperformance but don't affect our positive view," Caso emphasized in the report.

Other Wall Street firms echo this optimism. Morgan Stanley upgraded Nvidia to Strong Buy with a $250 price target on January 29, while Goldman Sachs maintained a Buy rating with a $320 target on January 9. The consensus among analysts remains Strong Buy, with an average one-year price target of $264.97, implying about 43% upside from current levels. Nvidia's market cap exceeds $4 trillion, supported by its leadership in semiconductors and AI infrastructure.

Implications and Forward Look

Without sustained AI demand, Nvidia could face growth headwinds, but current indicators suggest a robust environment. The company's focus on rack-scale growth, with 75% of revenue from boards, drives earnings beyond consensus. Short-term, Blackwell is ramping at 1,000 racks per week into 2026, with stock upside to targets ranging from $265 to $352 as concerns fade. Long-term, Rubin and Rubin Ultra ramps could support $500 billion in bull-case revenue by 2027, with EPS potentially reaching $12.

Efforts to reach Nvidia for comment on Wolfe's analysis were unsuccessful, but CFO Colette Kress has previously highlighted expanding revenue guidance for Blackwell and Rubin products. The broader AI beneficiary expansion and shipments of H200 chips to China add further upside, though U.S.-China trade tensions remain a watch item. Overall, Wolfe's call reinforces Nvidia's dominance in AI, offering investors a buying opportunity post-pullback.

Correction: An earlier version misstated the price target increase; Wolfe raised it to $275 from $250, not $275 from $240.