NVIDIA Stock Looks Expensive Until You Price The Vera Rubin Ramp

NVIDIA (NVDA) stock trades near $225, about 28.3 times its adjusted earnings over the past twelve months. Adjusted here means normalized net income with stock-based compensation added back, the same broad basis analysts use in their forecasts. For a stock near its 52-week high, that looks steep. But the multiple leaves out the growth analysts already expect, and that growth depends on how much NVIDIA can supply.

NVIDIA Looks Ordinary Once The Forecast Earnings Arrive

On the earnings analysts expect for fiscal 2027, the same price is about 24.1 times. On what they expect for fiscal 2028, it is about 14.5 times. The price is the same. The earnings analysts expect it to buy are not.

NVIDIA expects Vera Rubin, its newest platform, to be the fastest product ramp in the company’s history. Management puts NVIDIA’s revenue opportunity at about $40 billion per gigawatt of capacity with Vera Rubin, against $25 billion with Blackwell. Production shipments began in August, with purchase orders already in from every major hyperscaler, AI cloud, and system OEM.

So What Stands Between NVIDIA And Those Earnings?

For fiscal 2028, management has guided about 70% revenue growth, the first time it has guided a full year ahead. That guide does not depend on finding more demand. The CEO says demand is much greater than 70%, and that supply is what holds the guide there. The CFO expects supply to stay a bottleneck at least through the end of fiscal 2028 and calls memory pricing extreme.

Some of that demand also leans on NVIDIA’s own balance sheet. NVIDIA has invested nearly $50 billion in frontier AI labs. Management concedes some will call this circular financing and says the compute can be redeployed to other customers.

Analysts also disagree on what that growth earns. The 33 estimates of fiscal 2028 earnings run from $12.62 to $17.49 a share, a wide band for the year the forward multiple is priced on.

And NVIDIA’s Gross Margin Is Guided Lower As Memory Costs Climb

Consensus has earnings and revenue growing at a similar pace between fiscal 2027 and fiscal 2028, so analysts assume profit margins hold roughly steady. Gross margin is guided lower. Memory prices have risen more than management expected, and the guide has that margin settling in the 72% to 73% range in fiscal 2028, helped by price increases NVIDIA has already executed.

For the forecast to hold, that lost gross margin has to be made up further down the income statement. That is the second condition behind the fiscal 2028 multiple, alongside supply.

So Is NVIDIA Cheap, Or Only If The Chips Get Built?

Only if the chips get built, which means the supply arrives and the margins hold. The trailing multiple cannot tell you either. How much would you stake on a year that has not started?

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