What Are NVIDIA Investors Betting On?
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NVIDIA (NVDA) stock trades at 22.5 times its adjusted earnings over the past twelve months, which add back stock-based pay after tax, a price at which buyers assume a $4.3 trillion company still has plenty of growth ahead. That multiple comes from one year of past profit, but the price looks different against the profit forecast for fiscal 2027 and fiscal 2028. So what growth are buyers paying for at this price?
NVIDIA Investors Are Betting On Two-Thirds More Profit
The consensus forecast has NVIDIA’s net income rising 68.4% in fiscal 2028, with sales up 69.2%. In that forecast, profit grows no faster than sales, and NVIDIA’s forecast net margin is 54.8% in fiscal 2028, a little under the 55.0% forecast for fiscal 2027. So investors are betting on growth, not on wider margins. On the forecast, the price you pay for NVIDIA is 19.2 times its fiscal 2027 earnings and 11.4 times its fiscal 2028 earnings. Those are analysts’ forecasts, which may not add back stock-based pay the way the past-year figure does.
Is NVIDIA Already Growing Sales By Two-Thirds?
The company is growing even faster. Over the twelve months ending in July 2026, NVIDIA’s revenue rose 83.4%. In fiscal Q2 2027 alone, revenue reached $96.2 billion, up 105.9% from a year earlier, and management noted this marked the fourth consecutive quarter of accelerating growth.
Data center sales accounted for $89 billion of that revenue. In August 2026, NVIDIA also began production shipments of Vera Rubin, its newest system.
Management guided fiscal Q3 2027 revenue to $108 billion, plus or minus 2%. The company expects revenue to grow about 70% in fiscal 2028, putting the consensus forecast in line with management’s own outlook.
Where NVIDIA Could Fall Short Of The Forecast
The forecast for fiscal 2028 is not settled, with the gap between the highest and lowest estimates of profit per share at 19.6% of the consensus estimate, and supply is the likeliest place NVIDIA could miss it. On its fiscal Q2 2027 call, management said customers’ forecasts point to NVIDIA’s sales doubling in fiscal 2028, but that it expects slower growth because it is supply constrained. It also expects supply to remain a bottleneck at least through the end of fiscal 2028. If supply slips, the sales forecast would move down.
Memory costs are another place the forecast could miss, and this one is about profit, not sales. Management said memory prices have risen more than it expected and are still heading higher. Gross margin was 75% in fiscal Q2 2027, and management expects it to bottom at 71% to 72% in fiscal Q4 2027. It then expects 72% to 73% in fiscal 2028, as NVIDIA’s price increases take effect. The forecast’s net margin for fiscal 2028 is already a little lower than the forecast for fiscal 2027, but if memory prices climb past management’s new outlook, the profit forecast would move down.
If NVIDIA delivers the forecast, its price on fiscal 2028 profit is a fair picture of what you pay. Demand looks the sturdier part, since customers want more than NVIDIA can ship. The weaker side is supply and cost: if NVIDIA cannot ship enough, sales fall short of the forecast, and if memory costs more than management now expects, profit does. If either happens, the stock becomes a riskier bet, priced for profit NVIDIA has not yet earned. Data center revenue and gross margin are the measures to watch at NVIDIA’s next report, expected in November 2026.
Does This Mean You Should Act On NVDA?
Betting on a single stock is always risky, whichever way you lean. The Trefis High Quality (HQ) Portfolio holds 30 quality companies in equal weight and has returned 105% since its September 2020 launch.
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