Nvidia’s Reign at $4 Trillion: Can It Weather the Tech Sell-Off?
Nvidia currently stands alone as the last member of the $4 trillion market capitalization club, following the recent dips of Alphabet, Apple, and Microsoft. Investors are keenly watching as the chipmaker prepares to release its fiscal fourth-quarter earnings report on Wednesday, February 25, 2026, amidst a broader market sell-off affecting growth stocks.
The Magnificent Seven: A Shifting Landscape
The tech landscape is undergoing a recalibration. Although Nvidia has seen a 5.6% increase in its stock value year-to-date, other members of the “Magnificent Seven” – a group of leading tech companies – have experienced declines. Microsoft and Alphabet are down approximately 18% and 0.7% respectively. This divergence highlights Nvidia’s current strength, but also raises questions about its ability to maintain its position.
Earnings Expectations and Analyst Sentiment
Wall Street holds high expectations for Nvidia’s earnings. Analysts predict adjusted earnings of $1.53 per share on revenue of $66.2 billion. A significant number of analysts maintain a positive outlook on the stock. Of the 66 analysts covering Nvidia, 23 have a strong buy rating, 38 a buy rating, and only four have a hold rating.
JPMorgan currently has an overweight rating on Nvidia shares, with a year-end price target of $250, representing a potential 29.6% upside from Tuesday’s close. Analysts point to strong AI capital expenditures and ongoing demand for AI compute as key drivers for their bullish outlook.
Valuation and Growth Potential
Nvidia’s valuation is largely based on its projected earnings growth. Its price-to-earnings (P/E) ratio is currently 46.5, but falls to 24.2 when considering future earnings estimates. This is comparable to the S&P 500’s forward P/E ratio of 23.6, suggesting Nvidia isn’t drastically overvalued given its growth trajectory.
With $99.2 billion in trailing-12-month net income, Nvidia is poised to potentially become the world’s largest and most profitable company in the coming years.
Key Catalysts to Watch
Several factors could influence Nvidia’s performance in the near term. Analysts are closely monitoring the ramp-up of Blackwell Ultra rack volumes and accelerating demand for Vera Rubin. Rising memory costs are not expected to be a significant issue due to the robust demand for AI compute.
Upcoming events, such as CEO Jensen Huang’s keynote presentation at a TMT conference and the GTC developer event in mid-March, are expected to provide further insights into the Vera Rubin ramp and potential opportunities from the Groq acquisition.
Analyst Perspectives
- Morgan Stanley: Overweight rating, $250 price target. Expects Nvidia to trade up on good results, with acceleration in near-term drivers.
- Wolfe Research: Outperform rating, $275 price target. Nvidia remains their top pick due to its competitive positioning and strong growth runway.
- HSBC: Buy rating, $310 price target. Believes demand for GB200/GB300 racks will remain solid.
- RBC Capital Markets: Outperform rating, $245 price target. Forecasting strong Vera Rubin demand and healthy tech capex levels.
- JPMorgan: Overweight rating, $250 price target. Expects solid demand in PC gaming to offset declines in PC OEM.
Pro Tip
Keep a close eye on Nvidia’s guidance for future revenue and earnings. The company has a strong track record of “beat-and-raise” results, which often drive further upward revisions in estimates.
FAQ
Q: What is Nvidia’s current market capitalization?
A: Approximately $4.58 trillion.
Q: When is Nvidia’s earnings report scheduled?
A: After Wednesday’s close, February 25, 2026.
Q: What is driving the positive sentiment towards Nvidia?
A: Strong demand for AI compute, a compelling valuation, and a history of delivering strong results.
Q: What are the potential risks to Nvidia’s investment thesis?
A: Maintaining its high growth rate as it becomes a larger company.
Q: What is the Blackwell Ultra rack?
A: A key product driving Nvidia’s growth, with analysts expecting a strong ramp in volumes.
Did you know? Nvidia could become not only the largest company in the world but also the most profitable within the next couple of years.
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