Analysts Upgrade Nvidia as Rubin Chips Drive Growth Outlook
Nvidia is positioned as a top AI investment for 2027 following a 'Strong Buy' upgrade and projections of 70% revenue growth.
Nvidia Inc. is positioned as a top artificial intelligence investment for 2027 due to a perceived disconnect between its business growth and stock price performance. Despite a 106% year-over-year revenue increase and a 128% rise in earnings per share in the second quarter, the company's share price rose nearly 30% in 2026.
Management projects a 70% revenue growth rate for fiscal year 2028, a forecast supported by Wall Street analysts. This growth is expected to be driven by the launch of the Rubin generation of chips, which feature more advanced capabilities and a higher price point than previous iterations. Financial analyst Johnny Zhang upgraded the company to a 'Strong Buy' rating on October 2, 2026, citing strong earnings revisions and favorable technical indicators.
Analysts note that the stock is currently undervalued, trading at approximately 24.6 times forward earnings compared to a historical average of 40 times. If the market returns the company to a 30-times-earnings valuation based on current projections, the stock price could double by the end of 2027. This outlook contrasts with competitors like Advanced Micro Devices, which saw 200% gains in 2026 that analysts suggest are already priced in.
While operating efficiency may support earnings, Zhang noted a drop in free cash flow margin from 28.8% to 22%, driven by a spike in accounts receivable during the second quarter.
