NVIDIA (NVDA) Expands AI Infrastructure Deals, Is The Upside Already Priced In?

NVIDIA (NVDA) is back in focus after a string of AI infrastructure deals and product launches, ranging from Hut 8 data center capacity in Texas to the Vera Rubin CPU platform and new AI security partnerships.

See our latest analysis for NVIDIA.

NVIDIA’s latest AI factory deals and Vera Rubin launches come after a choppy few weeks, with the stock down over the past month on a 30 day share price return of 2.52% and a 90 day share price return of 1.72%, yet still showing a year to date share price return of 3.28% and a 1 year total shareholder return of 9.80%. This sits on top of a very large 3 year and 5 year total shareholder return that suggests longer term momentum has been strong.

If you are watching how AI infrastructure stories like NVIDIA’s play out, it can also be useful to look at other companies tied to the same theme and see which ones meet your own criteria using the Simply Wall St screener for 56 AI infrastructure stocks

NVIDIA’s deals and product launches paint the picture of a powerful AI infrastructure business. After the recent share price pullback, the next step is to ask whether that strength is already fully reflected in today’s valuation.

Most Popular Narrative: 42.6% Undervalued

NVIDIA last closed at $195.04, while the most followed narrative on Simply Wall St points to a fair value of $339.90. That gap is built on a very specific view of how AI data center demand and NVIDIA’s product roadmap could translate into long term revenue and power usage across the sector.

Nvidia will hit $400b annual revenue in 5 years time. ~90% of revenue will come from data centre customers. This equates to $90b / quarter, or equivalent to 30,000 Blackwell racks (at ~$3m per rack).

At 150kW per Blackwell rack, data centres will need to expand at 4.5gW/quarter to keep up. Global data centres are expected to increase wattage at 15% per year, which in 5 years time will be close to the 18gW annual increase required. AI (GPU) data centres have higher yields than other data centres, so some amount of use conversion is also expected.

Read the complete narrative.

Want to see what sits behind that $400b revenue path and heavy data center build out assumptions? The revenue mix, margin profile and future earnings multiple in this narrative are all tightly linked. The fair value hinges on a specific view of NVIDIA’s data center share, pricing power and reinvestment pace. The full narrative spells out those moving parts so you can judge the story for yourself.

Result: Fair Value of $339.90 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this NVIDIA narrative still faces real risks, including tougher GPU competition and potential regulation that could slow AI data center spending and power build outs.

Find out about the key risks to this NVIDIA narrative.

Next Steps

With mixed sentiment around NVIDIA’s AI push and valuation, now is a good time to review the data yourself and reach your own judgement. You can weigh both sides of the story in our summary of 4 key rewards and 2 important warning signs

Looking for more NVIDIA investment ideas beyond the headline?

Do not stop at NVIDIA. If you want a fuller watchlist built around clear fundamentals, use these focused stock ideas to pressure test your next moves.

• Spot potential value opportunities early by scanning companies that currently screen as 56 high quality undervalued stocks.
• Strengthen your downside protection by focusing on companies from the 89 resilient stocks with low risk scores that have more resilient risk profiles.
• Hunt for off-the-radar opportunities by working through the screener containing 20 high quality undiscovered gems before they appear on everyone else's radar.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com