NVDA has more upside; base case price target is $275 by end of 2026 (approx. 22% gain).

I've already more than doubled my money on Nvidia stock. I bought my shares in 2025 around April after Liberation Day tariff announcements sent the share price crashing to around $93.

So my cost basis is in the low 90s. Today it's over $220 $225 a share. More than double my money.

I should be happy, right? And I am with a rate of return, don't get me wrong, but I don't think it's going to stay around these levels. If I did, I would sell these shares and lock in my profits, but I actually think there's more upside.

Where precisely do I think Nvidia stock will go? That'll be the topic of this video. I'll reveal my prediction or my price target of where I think Nvidia stock will end by December 31st, 2026.

So, one of the reasons why Nvidia stock is soaring and one of the reasons that attracted me to Nvidia stock is because the business is booming. It's generating booming sales, booming profits, and the company's products and services are sold out.

This isn't one of those hype situations. The share price is not up because of hype. It's not up because of enthusiasm. It's not up because the CEO is a great marketer, which Jensen Wong is a great marketer, but that's not the primary reason that's causing the share price to increase.

It's actual business. It's actual tangible sales and earnings, which have absolutely exploded.

Check this out. Nvidia's earnings per share in the fiscal year, which ended January of 2023, were just 33 cents. Just 33 cents. And in the next year, those increased to $1.24. And the year after that, in January of 2025, in the fiscal year that ended then, its earnings per share jumped to $2.95.

And then earlier this year, January of 2026, its earnings per share increased further still to $4.70.

And the analysts on Wall Street that are following Nvidia, they expect earnings per share to quadruple over the next three years from $4.70 all the way up over $20 earnings per share by the end or by the end of its fiscal year which ends January of 2029.

So these are actual profits, actual sales that business is performing and why the share price is booming. But to make this price prediction, the figure I'm looking at very closely is the earnings per share forecasted for the fiscal year, which ends January of 2028, of $15.52.

These are the earnings per share for essentially calendar year 2027 for Nvidia. Fiscal year is different than calendar year. A lot of corporations are allowed to have different fiscal years compared to calendar year.

And the closest approximation for Nvidia, the fiscal year, which ends January of 2028, is actually for calendar year results in 2027. I need that figure to make my price prediction.

I also need the company's forward price to earnings ratio, which as of this recording is trading at a ridiculously cheap forward PE ratio of 14.6. These are near the cheapest levels you've been able to find Nvidia stock going back roughly a decade or more.

Typically, Nvidia stock trades at a more expensive valuation.

But more recently, investors have soured on Nvidia and several AI stocks, including Micron and others, which are trading at relatively cheap valuations when measuring on a forward price to earnings basis.

And you might be asking why. And the earnings per share that are forecasted for Nvidia over the next few years, investors don't expect that to continue. Investors are actually expecting a big drop off for Nvidia following these next few years.

Investors expect sales to continue booming for the next couple of years to be sure, but after that they're not expecting very strong results.

They're expecting that the companies that are building these data centers, Amazon, Microsoft, Alphabet, Meta Platforms, Oracle, that they'll build a bunch of these data centers like they're doing right now.

But once once they're finished with this initial buildout that they'll stop that they won't build more that then the only demand for Nvidia's products will be replacing those units that were put into these data centers over these several years.

Let's say the 2020s, right? Which is likely where the majority of new data center buildouts will be when looking back historically will have been in 2020. And then looking futuristically, most of the sales into data centers will be from replacements, replacing the components that were placed into these data centers today.

So that's why you see companies like Nvidia and Micron trading at these relatively cheap valuations is because of that not longlasting nature of their sales of their products and services.

Nvidia unfortunately is in a cyclical industry. Although many investors are trying to argue that it's no longer cyclical because of the AI boom, because of data centers, because of the longerl lasting nature of customer agreements that are now happening, whereas previously you weren't having those longer tenur arrangements.

But I would argue even as an Nvidia bull, even as an Nvidia shareholder, even as someone that's ranked Nvidia as the best stock to buy, I still think the industry overall is cyclical. even if the cyclicality might be uh spread out over uh longer duration than previously would be experienced.

So now that we've got an understanding of the earnings per share expectations and the forward PE multiple, I could bring you to my scenario analysis for Nvidia and where the share price could be by the end of this year.

Look, if all else remains equal, nothing changes, the earnings per share estimates remain where they're at, the forward PE multiple remains where it's at, the stock price will likely be flat with the market price ending the year at $226, up $1 from the current 225 price.

I don't think that's the most likely outcome. I think what's more likely is the forward PE multiple increasing. If it increases to 17, the ST stock price could rise to $264. If it increases to 21, the stock price could rise to $326.

But it's not all sunshine and rainbows, and the forward PE multiple could actually decline. And there are several factors that could cause a decline. An increasing fearfulness from investors who point to the circular financing arrangements between Nvidia and its customers and become fearful and think that the industry is in a bubble and sell off companies like Nvidia.

That's a totally plausible scenario. Not a most likely scenario, not my base case scenario, but a definitely a scenario that has a nonzero probability.

And if that happens, let's say the forward PE multiple declines to 11, then Nvidia stock price could actually fall from here to $171. And of course, if I thought this was a high probability scenario, I would sell my Nvidia stock, but I don't think so.

I don't think that's the case. That's why I'm keeping and holding on to my Nvidia stock.

So, the scenario that I see as most likely, even though there's, you know, so many different scenarios that could happen, I only brought forth just four of them in this video. I could have brought forth so many more.

It's an infinite amount of scenarios that are possible. I just brought you the four most likely that I see as possible. And overall, my base case where I think the share price ends is between 260 and 290 by the end of the year.

And at the midpoint, that's 275. That's a very nice upside of about 22% from where Nvidia's current share price is.

I don't think Nvidia's share price has appreciated as much as the fundamentals suggest it should have. I think there's been a lot of concern from the investor community about some of the things I have already talked about like the circular financing arrangements like the cyclicality of the industry that's kept Nvidia stock at a relatively limited growth trajectory over the last 9 months or so.

And you've seen stocks and share prices of other companies in the semiconductor industry that are up by hundreds of percent or even thousands of percent. And Nvidia stock is only up roughly 20% year-to- date, which is a great rate of return.

I'm not complaining. I'm happy with my rate of return for Nvidia stock, but the fundamentals to me suggest that the share price should have increased by even more.

So, I think there's two primary catalyst that could result in Nvidia stock price falling outside of this range, both on the upside and downside. I'll start with the upside. If Anthropic by the end of this year IPOs becomes a publicly traded company and reaches a market capitalization of $2 trillion, that will create in my opinion a relief rally for Nvidia.

That'll decrease the risk for the industry overall because a lot of the fears from industry participants are that anthropic and open AI are losing billions of dollars on the bottom line.

These are the primary consumers of a lot of the data center capacity that's being built.

Even though Amazon, Alphabet, Microsoft are the ones that are paying to build these, the ones that are actually consuming them are Anthropic, OpenAI are the two primary consumers, followed by Google's Gemini and SpaceX.

Um, whatever their uh AI is called, I haven't used it. It's fourth place. Uh, I hardly get around to use the first or second place large language model.

So, if Anthropic comes to market at this $2 trillion market capitalization, which is not so far-fetched, right? If SpaceX can attract a $2 trillion market capitalization with a fraction of the AI success that open a uh Anthropic is having.

It's totally feasible that Anthropic can come to market with a $2 trillion market capitalization. Now, Anthropic doesn't have Elon Musk, the greatest marketer to investors that the world has ever seen, to be able to sell any investment at five or 10 or 20 times the actual value of the investment.

Anthropic doesn't have that, but the actual business value, the actual case for investment is much stronger with Anthropic than it is with SpaceX. So a $2 trillion market capitalization is not a small probability event for anthropic here.

And if they do come to market with that kind of market capitalization, that would be sole positive for the industry. That would create a decreasing fearfulness from investors that okay, a sigh of relief.

Open AI or Anthropic are not going to go bankrupt. They're going to have enough money to support themselves to bridge the gap between where they are today and where they could be three years from now or five years from now where their revenues will be large enough to support their investments and computing and they'll be able to pay their suppliers.

They'll be able to pay Microsoft. They'll be able to pay Amazon. They'll be able to pay Nvidia for the products and services that they're consuming. and the AI ecosystem won't be a bubble that collapses.

It won't be a bubble that burst. So, that's a significant event. If that happens, I think Nvidia stock price could be well in the 300s by the end of this year.

The flip side of that is a big credit squeeze. So, I talked about how Anthropic OpenAI are losing billions of dollars on the bottom line. They are being extended credit from investors, suppliers, etc., etc. They are sustaining themselves through other funding sources.

They're not self-funding. And a lot of that is because investors, lenders have been willing to lend, have been willing to extend that credit, have been willing to trust that anthropic and open AI and to some extent some of the smaller AI companies that are losing money that they'll eventually be able to pay back.

But we might reach a point where there's a sort of limitation where lenders and investors say all right enough is enough now. Amazon, Alphabet, Meta Platforms, these are companies that are now they were cash cows that were generating over a hundred billion in annual free cash flow and now they've turned negative.

Right? I'm forecasting Amazon's free cash flow is negative this year. I'm forecasting Meta Platform's free cash flow is negative this year and they're going to markets and they're borrowing 20 30 40 billion $50 billion

and if at some point investors say all right that's enough we're not lending out as much anymore we are concerned with our exposure to this industry or this economy or this credit cycle in a time when there's a lot of macroeconomic headwind going around, right?

The US economy is slowing down. We've got increasing trade barriers. We've got geopolitical tension. We've got multiple wars. We've got inflation getting out of control. We've got a central bank that's losing credibility with investors.

We've got government institutions and government leaders that are losing credibility with individuals and investors alike. This is approach. There could be a moment, I'm not saying we're approaching that moment, but there could be a moment where investors say, you know what, I don't feel comfortable lending out credit or extending credit in this environment, in this backdrop.

So, you know what? I'm going to keep my money in my pocket. Thank you very much for the opportunity. I'm not lending anymore. Okay?

And if that should happen, if there should be uh lack of free flowing credit to these AI companies, that could be a significant downside for Nvidia because as I mentioned, there's been a lot of uh fancy financing gymnastics going on here to facilitate some of these sales.

You've heard it called circular financing. And I just look at it as fancy engineering to create and facilitate sales where one company sells a product and gets back stock or you sell a product and you get some equity upside option with some lending portion.

There's been a lot of fancy financial vehicles that have been created and are going around in the marketplace that's, you know, creating elevated risk. And to be fair, that risk is being spread out, you know, not just with banks, it's being spread out with companies that are taking stakes in each other.

And so there are connections and interconnections between these, but it's spread out and diversified.

But if there is a stop in this, if there is some, you know, okay, enough is enough and the vault is closed, no more capital to be borrowed, then that creates a real difficult situation for Nvidia because that just a and the share price could fall outside of this target that I'm listing here below 270, 260. It could even be in the 100s.

But in terms of the viability of Nvidia's business model, it wouldn't be a longerterm negative for the company. It would be a near-term negative. It would just mean that sales that would have happened this year or would have happened 3 months from now, 6 months from now actually get pushed out further because there won't be financing available for those sales.

Those sales would need to be funded by actual revenue and cash flow from the companies that they're going to.

And I've talked about how there's a mismatch between the cost of building a data center and the cash flow that results from the computing power that's created in that data center.

Right? You bu it costs billions of dollars to build that data center and then the cash flow trickles in over multiple years. Not too much unlike buying a home or an apartment building and then renting it out, right?

you to buy an apartment building for, let's say, $5 million, and then you collect maybe $200,000 in rent every year for the next several years to recoup your initial investment.

But there's a mismatch between cash flow, right? And if you couldn't borrow, there would be a lot fewer sales of real estate. Imagine nobody could borrow to get a mortgage. There will be a lot fewer sales.

It doesn't take away the value of owning a home. It just means people need to save longer in order to be able to purchase that home.

And so it extends the sales cycle, which is what would happen to Nvidia, which would cause my price target not to come to fruition. In fact, I would expect the share price to fall if there should be that kind of credit event.

But what do you think about my price target for Nvidia stock? Do you think that's a realistic target? $275 at the midpoint, 22% upside from here between now and the end of 2026.