When UBS speaks on Nvidia, Wall Road listens. In a March 2 analysis be aware, UBS analyst Timothy Arcuri reiterated a Purchase ranking on Nvidia (NVDA) with a $245 value goal. That’s practically 40% upside from the place shares had been buying and selling on the time.
The decision got here after Arcuri met with Nvidia CFO Colette Kress throughout a UBS semiconductor bus tour. What he heard didn’t spook him. It made him extra bullish.
Here’s what is driving that confidence.
Nvidia simply posted one of many greatest quarters in tech historical past
On Feb. 25, Nvidia reported document quarterly income of $68.1 billion for the fourth quarter of fiscal 2026. That’s up 73% from a yr earlier and up 20% from the prior quarter.
It beat Wall Road’s estimate of $66.2 billion by practically $2 billion.
Knowledge heart income got here in at $62.3 billion, up 75% yr over yr. Gross margins held agency at 75%. That final quantity issues. Skeptics have spent months predicting a margin squeeze from rivals like Google and Broadcom. It has not occurred.
CEO Jensen Huang didn’t mince phrases on the earnings name. “Computing demand is growing exponentially,” he stated. He argued that the agentic AI period has arrived and that compute has successfully turn into income for cloud suppliers.
The steerage is what actually turned heads
Sturdy outcomes are one factor. The steerage was one other story solely.
Nvidia projected $78 billion in income for Q1 fiscal 2027. Wall Road was anticipating $72.6 billion. That may be a large beat on ahead steerage, not simply rear-view numbers.
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It was additionally the fourth consecutive quarter of accelerating progress. UBS famous that stock buy commitments practically doubled quarter over quarter. A $100 billion quarterly income run is now not a fantasy.
What drove the document quarter:
- Knowledge heart income of $62.3 billion, up 75% yr over yr, powered by the Blackwell GPU rollout throughout main cloud suppliers
- Networking income of practically $11 billion in This autumn alone, up greater than 3.5 instances yr over yr because the Spectrum-X ethernet platform features traction
- Sovereign AI income greater than tripled to over $30 billion for the total fiscal yr as governments construct out nationwide AI infrastructure
- Free money movement of $35 billion within the quarter and $97 billion for the total fiscal yr, giving Nvidia huge room to take a position and return capital
The networking enterprise is what most traders are lacking
This was Arcuri’s sharpest takeaway from his dialog with Kress. Most traders are fixated on Nvidia’s GPUs. UBS thinks the networking enterprise is the sleeper story.
Nvidia’s Spectrum-X ethernet switches and BlueField processors have gotten the spine of AI knowledge facilities. They’re deeply embedded in buyer infrastructure. That makes them very exhausting to tear out. UBS got here away with larger confidence on this section as a long-term revenue driver.
Photograph by NurPhoto on Getty Pictures
Networking income was up greater than 263% yr over yr in This autumn. That single section is already on tempo to turn into a multibillion-dollar enterprise by itself, fully separate from GPU gross sales.
The dangers are actual and price realizing
No sincere bull case ignores the draw back. Nvidia’s inventory truly fell 5.5% the day after its blowout earnings. That erased roughly $260 billion in market worth in a single session. Excessive expectations have a value.
China can be an actual headwind. Export restrictions have minimize off a once-meaningful income stream. In its personal Q1 steerage assertion, Nvidia stated it’s not assuming any knowledge heart compute income from China. Sovereign AI offers within the Center East and India are filling a few of that hole, however it’s nonetheless a niche.
Key dangers heading into GTC:
- China export restrictions stay a structural headwind with no near-term decision in sight
- Customized chip packages from Google and Broadcom might steadily cut back hyperscaler dependence on Nvidia over time
- Valuation sits at roughly 47 instances ahead earnings, effectively above the S&P 500 common of twenty-two instances
- Gaming income of $3.7 billion missed estimates of $4 billion as post-holiday stock weighed on the section
The GTC convention is the following massive second to look at
Nvidia’s GTC convention kicks off March 18. UBS and most bullish analysts see it as the following main inventory catalyst.
Nvidia is anticipated to unveil its next-generation Rubin GPU structure. Huang has stated it might ship as much as a tenfold discount in AI inference prices versus Blackwell. The corporate has already introduced partnerships with AWS, Google Cloud, Microsoft Azure, and Oracle to deploy Rubin-based methods first.
UBS is much from a lone voice. Throughout 39 analyst scores tracked by TipRanks, 37 suggest shopping for Nvidia. The typical value goal sits at $273.38. Morgan Stanley is at $260. RBC Capital is at $250.
The underside line from UBS is simple. Hyperscalers will not be pulling again. They’re locking in 2027 compute buildouts proper now. AI spending shouldn’t be slowing down. It’s accelerating. For Nvidia, the demand query is settled. The one query left is how briskly provide can sustain.
Associated: Denny’s, GPUs & AI: The journey of Nvidia
