Goldman Sachs expects NVIDIA's fourth-quarter revenue to exceed market expectations by approximately $20 billion. However, surpassing expectations by $20 billion may merely be 'in line with forecasts.' The real driver for the stock price will be guidance for the next 12 to 18 months.
Goldman Sachs believes that any positive commentary from NVIDIA regarding the visibility of its 2027 revenue could act as a catalyst for the stock price. The extent to which incremental demand from non-hyperscale cloud customers offsets fluctuations from traditional clients remains a source of uncertainty for the 2027 revenue forecast.
$NVIDIA (NVDA.US)$The upcoming fourth-quarter earnings report is expected to once again beat expectations. However, investors' focus has shifted toward the longer-term future. The current stock price has largely priced in growth potential through 2026, and further upside will depend on the company’s visibility into 2027 revenues.
According to Storm Chaser Trading Desk, Goldman Sachs analyst James Schneider projected in his latest report that NVIDIA's Q4 revenue would exceed market expectations by approximately $2 billion, with the firm’s Q1 revenue forecast being 8% higher than the Wall Street consensus. However, he also noted that exceeding expectations by $2 billion might merely be considered “in-line,” and what truly drives the stock is guidance for the next 12-18 months. Goldman Sachs maintained its Buy rating and a $250 price target, indicating a 43.5% upside from the current price of $174.19.
Specifically, Goldman Sachs estimates$NVIDIA (NVDA.US)$fourth-quarter revenue of $67.34 billion (market expectation: $65.64 billion) and adjusted earnings per share (EPS) of $1.59 (market expectation: $1.52); first-quarter revenue of $76.84 billion (market expectation: $71.15 billion) and adjusted EPS of $1.80 (market expectation: $1.65). The data center business remains the core engine, with Goldman Sachs forecasting fourth-quarter revenue at $61.3 billion and first-quarter revenue reaching $71.1 billion.
More striking is the valuation discrepancy. Goldman Sachs’ EPS forecasts for fiscal years 2026 and 2027 are 17% and 29% higher, respectively, than market consensus. This implies either that Goldman Sachs is far more optimistic about growth than the market, or that there is significant mispricing in the market.
A clearer roadmap is needed for the $500 billion projection.
$NVIDIA (NVDA.US)$A forward-looking target of $500 billion in data center revenue was previously announced. Investors now want to know: when will this figure be achieved, what will the client composition look like, and how much will computing and networking contribute respectively?
Starting from this base, which is already significantly above market expectations, Goldman Sachs believes any positive commentary from NVIDIA regarding 2027 revenue visibility could serve as a catalyst for the stock. According to Goldman Sachs’ model, data center revenue for fiscal year 2027 is projected to reach $357.3 billion, 16% higher than market expectations, and further increase to $483.9 billion in fiscal year 2028, surpassing market expectations by 22%.
The pace of product transitions is also a key variable. Goldman Sachs expects the Rubin GPU to begin shipping in Q3, with significant volume ramp-up in Q4 and beyond. According to the model, by Q1 of fiscal year 2027, Rubin will account for the majority of revenue, while Blackwell’s share will decline rapidly. This rapid product iteration represents NVIDIA’s technological moat but also tests supply chain execution capabilities.
When will non-traditional customer demand materialize?
OpenAI is expected to begin large-scale deployment in the second half of 2026, aiming to build approximately 26GW of computing power within 4-5 years. Although procurement volumes in 2026 remain small relative to this long-term goal, any initial signs of execution are worth monitoring.
Goldman Sachs noted that OpenAI is collaborating with$NVIDIA (NVDA.US)$、$Broadcom (AVGO.US)$and$Advanced Micro Devices (AMD.US)$to advance deployment. Beyond OpenAI, Anthropic has raised its 2026 calendar year revenue forecast by 20%, while sovereign AI deployment activities remain robust. The extent to which incremental demand from non-hyperscale cloud customers offsets fluctuations from traditional clients is a key uncertainty for the 2027 revenue forecast.
Quantitative data on increased capital expenditures by U.S. hyperscale cloud providers for 2026 and 2027, specific details on non-hyperscale customer demand in 2026, and performance benchmarks of large language models trained on NVIDIA's latest chips—these three categories of information are expected to be released sequentially in the first half of the year, forming a catalyst path for stock prices. The GTC conference in March will serve as an important observation window.
Intensified Competition, Yet CUDA Remains a Barrier
$Alphabet-A (GOOGL.US)$TPU v7,$Advanced Micro Devices (AMD.US)$MI455X and$Microsoft (MSFT.US)$The Maia 200 is expected to achieve computational performance closer to NVIDIA's products. The increasing efforts by hyperscale cloud providers to develop in-house ASICs pose a potential threat to NVIDIA's market share.
Goldman Sachs forecasts$NVIDIA (NVDA.US)$will emphasize the competitive advantage of the CUDA ecosystem. This software platform has accumulated a developer network effect over the years. The recent transaction between NVIDIA and Groq, as well as its impact on inference costs, is also noteworthy – the growth rate of the inference market may surpass that of the training market, and the competitive landscape of this segment remains to be fully defined.
The China market could open up additional revenue contributions before 2027, but the exact scale and timing of these contributions require further disclosure from management.
Valuation Bets on Structural Demand
Goldman Sachs’ target price of $250 is based on a 30x price-to-earnings ratio applied to normalized earnings per share of $8.25. This implies that NVIDIA can maintain high profitability even if growth in AI infrastructure spending slows.
The current share price corresponds to a P/E ratio of approximately 20x for fiscal year 2027 (per Goldman Sachs estimates) and around 14x for fiscal year 2028. If Goldman Sachs’ growth forecasts are accepted, the valuation does not appear excessive. However, the issue lies in the probability of realizing Goldman Sachs’ predictions—a 29% upside to EPS requires sustained demand exceeding expectations or gross margins remaining at approximately 75%.
Key risks include slowdowns in AI infrastructure spending, loss of market share to ASICs and AMD, margin compression due to competition, and supply chain constraints. Goldman Sachs’ model indicates operating margins stabilizing between 67-69% from fiscal years 2027-2029, which assumes the company maintains cost control and pricing power while scaling operations.
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Editor/Melody