Three Reasons Nvidia’s Stock Is Still Compelling, and Why It Could Rise 30% in the Next Year

A screen of the S&P 500 still has Nvidia standing out, despite this year’s DeepSeek disruption for the stock.

A year ago, a screen of the S&P 500 placed Nvidia Corp. at the top of the list of companies that were expected to show the most rapid increases in revenue from 2023 through 2025. Now it is time to run the screen again, using estimates through 2026.

We ran that screen on Feb. 15 last year, using data as of the market close the previous day. Nvidia’s (NVDA) stock has returned 80% from Feb. 14, 2024, through Tuesday, while the S&P 500 SPX has returned 23%. All investment returns in this article included reinvested dividends.

Nvidia’s stock has declined 1.1% this year, while the S&P 500 has returned 3.3%, through Tuesday. So one might conclude that the disruption on Jan. 27, when Nvidia’s stock sank 17.5% on the news that DeepSeek had developed effective generative artificial intelligence technology at a far lower price than previously thought possible, has turned out not to be such a big deal. At least not yet.

It turns out that Nvidia’s stock looks even more compelling than it did a year ago, based on a combination of expected sales growth, the stock’s valuation to expected earnings and Wall Street analysts’ price targets.

A new screen of the S&P 500 for expected revenue growth

We screened consensus revenue estimates for the S&P 500 among analysts by FactSet through 2026, with 2024 as the baseline. The annual sales estimates were adjusted by FactSet for calendar years, since about 20% of companies in the S&P 500 have fiscal years that don’t match calendar years. The screen was limited to companies in the index covered by at least five analysts polled by FactSet.

We are presenting three tables for the companies that passed the screen in order to show expected sales growth, how the stock’s valuations to expected earnings have changed over the past year, and to summarize analysts’ opinions of the stocks at current prices.

Here are the 20 companies in the S&P 500 expected to show the highest compound annual growth rates (CAGR) for revenue from calendar 2024 through calendar 2026. The sales estimates are in millions.

   Company                             Ticker    Estimated sales CAGR through 2026  Est. 2026 revenue  Est. 2025 revenue  Est. 2024 revenue 
   Nvidia Corp.                        NVDA                                  38.5%           $236,824           $192,328           $123,523 
   KeyCorp                             KEY                                   30.8%             $7,900             $7,372             $4,619 
   Palantir Technologies Inc. Class A  PLTR                                  28.9%             $4,760             $3,751             $2,865 
   Super Micro Computer Inc.           SMCI                                  28.3%            $32,179            $27,630            $19,549 
   Truist Financial Corp.              TFC                                   27.1%            $21,792            $20,739            $13,490 
   First Solar Inc.                    FSLR                                  26.4%             $6,669             $5,527             $4,176 
   Eli Lilly and Co.                   LLY                                   25.1%            $70,432            $58,982            $44,997 
   Micron Technology Inc.              MU                                    24.9%            $44,461            $38,202            $28,502 
   KKR & Co Inc.                       KKR                                   24.8%            $11,162             $9,268             $7,167 
   Coterra Energy Inc.                 CTRA                                  23.3%             $8,332             $7,727             $5,484 
   EQT Corp.                           EQT                                   23.0%             $8,483             $7,802             $5,611 
   Take-Two Interactive Software Inc.  TTWO                                  22.4%             $8,314             $7,565             $5,549 
   Axon Enterprise Inc.                AXON                                  22.3%             $3,103             $2,558             $2,076 
   Advanced Micro Devices Inc.         AMD                                   21.9%            $38,333            $31,814            $25,785 
   CrowdStrike Holdings Inc. Class A   CRWD                                  21.8%             $5,716             $4,690             $3,856 
   Boeing Co.                          BA                                    21.1%            $97,614            $84,307            $66,517 
   Arthur J. Gallagher & Co.           AJG                                   21.0%            $16,749            $14,844            $11,436 
   Blackstone Inc.                     BX                                    21.0%            $17,031            $14,067            $11,637 
   Targa Resources Corp.               TRGP                                  19.5%            $23,141            $20,960            $16,211 
   ServiceNow Inc.                     NOW                                   19.2%            $15,606            $13,038            $10,984 
                                                                                                                            Source: FactSet

These estimates compare to a weighted estimated revenue CAGR of 5.7% for the S&P 500.

From the consensus estimates, analysts expect Nvidia’s sales to increase at an annualized pace of 38.5% over the next two calendar years. Last year when we ran the screen Nvidia’s expected two-year sales CAGR was 38.9%.

One reason KeyCorp (KEY) of Cleveland places second on the list is that its 2024 revenue estimate has been lowered by losses on the sale of securities, which totaled $908 million during the year. This was included in the bank’s noninterest income and lowered its total revenue.

Truist Financial (TFC) also makes the list because of a balance-sheet repositioning that caused it to book $6.65 billion in securities losses in 2024, which lowered the bank’s revenue.

Now let’s look at forward price-to-earnings valuations. These are stock prices divided by rolling 12-month earnings-per-share estimates among analysts polled by FactSet. For the S&P 500 as a whole, the weighted forward P/E is now 22.2, up from 20.6 a year ago.

   Company                             Ticker    Forward P/E  Forward P/E one year ago 
   Nvidia Corp.                        NVDA             29.7                      33.3 
   KeyCorp                             KEY              11.6                      11.2 
   Palantir Technologies Inc. Class A  PLTR            204.4                      72.2 
   Super Micro Computer Inc.           SMCI             12.0                      29.1 
   Truist Financial Corp.              TFC              11.5                      10.2 
   First Solar Inc.                    FSLR              7.4                      10.7 
   Eli Lilly and Co.                   LLY              37.0                      56.4 
   Micron Technology Inc.              MU               10.5                      33.2 
   KKR & Co Inc.                       KKR              23.8                      19.1 
   Coterra Energy Inc.                 CTRA              8.7                      10.9 
   EQT Corp.                           EQT              16.9                      11.8 
   Take-Two Interactive Software Inc.  TTWO             31.0                      27.0 
   Axon Enterprise Inc.                AXON            103.4                      63.8 
   Advanced Micro Devices Inc.         AMD              22.7                      45.0 
   CrowdStrike Holdings Inc. Class A   CRWD             97.8                      86.9 
   Boeing Co.                          BA                N/A                      56.2 
   Arthur J. Gallagher & Co.           AJG              27.0                      23.1 
   Blackstone Inc.                     BX               28.3                      25.1 
   Targa Resources Corp.               TRGP             24.6                      14.6 
   ServiceNow Inc.                     NOW              60.1                      60.3 
                                                                       Source: FactSet

Some of these P/E ratios are very high, but this should not be much of a surprise, as many of these rapid sales growers aren’t yet emphasizing profits. They are focused on growing their markets or increasing market share.

Nvidia’s forward P/E has declined over the past year, even though its stock has returned 84% for one year through Feb. 11. That means consensus earnings estimates have more than kept pace with the stock price. And one could argue that Nvidia trades at a low P/E, considering how much more quickly it is expected to grow compared with the index as a whole.

So there are three reasons Nvidia is even more compelling than it was a year ago – the leading expectation for sales growth, the declining P/E valuation and the relatively low P/E valuation.

Now let’s look at a summary of analysts’ opinions about the 20 stocks. You might need to scroll the table to see all of the data.

   Company                             Ticker    Feb. 11 price  Consensus price target  Implied 12-month upside potential  Share "buy" ratings  Share neutral ratings  Share "sell" ratings 
   Nvidia Corp.                        NVDA            $132.80                 $174.75                                32%                  91%                     9%                    0% 
   KeyCorp                             KEY              $17.56                  $19.92                                13%                  42%                    58%                    0% 
   Palantir Technologies Inc. Class A  PLTR            $112.62                  $92.59                               -18%                  28%                    52%                   20% 
   Super Micro Computer Inc.           SMCI             $38.61                  $36.63                                -5%                  40%                    40%                   20%
Scroll to Top