Nvidia (NVDA) shares declined 2% on Wednesday, caught in a broader technology selloff that dragged the Dow Jones Industrial Average down 711 points (1.4%), the S&P 500 1.2%, and the Nasdaq Composite 1.6%. Despite the pullback, Wall Street analysts remain overwhelmingly bullish on the chipmaker, citing robust AI infrastructure spending, expanding product lines, and a valuation that appears attractive relative to projected earnings growth.
AI Infrastructure Demand Continues to Drive Growth
Nvidia remains a primary beneficiary of the ongoing AI capital expenditure boom, as cloud providers and AI developers continue to invest heavily in computing hardware. In the first quarter of fiscal 2027, the company reported revenue of $81.6 billion, an 85% year-over-year increase, with sequential revenue growth of $13.5 billion. The data center segment was the primary driver, generating $75 billion in revenue—up 92% from a year earlier and 21% sequentially. Management attributed much of this strength to demand for the Blackwell architecture.
Within data center, computing revenue reached $60 billion, while networking revenue climbed to $15 billion, nearly tripling from the prior-year period. This rapid networking growth underscores Nvidia's strategy to expand beyond graphics processing units (GPUs) and capture a larger share of AI infrastructure spending by offering integrated systems that combine processors, networking, software, and system architecture.
CPU Expansion Opens New Growth Opportunities
Another area drawing investor attention is Nvidia's expansion into the central processing unit (CPU) market. As AI workloads shift from model training toward inference and autonomous AI agents, demand for high-performance CPUs is expected to rise. Nvidia estimates the CPU market opportunity at approximately $200 billion and projects its CPU products will generate roughly $20 billion in revenue this year.
Seeking Alpha analyst Vinay Utham, CFA, reiterated a Strong Buy rating on Nvidia and raised his base-case price target to $311. He noted that the company's first-quarter fiscal 2027 results showed growing diversification within its data center business, reducing customer concentration risk. Utham also highlighted Nvidia's expansion into the CPU market through products such as Vera CPU and RTX Spark, describing it as a significant growth opportunity that may not yet be fully reflected in investor expectations. This expansion could further strengthen Nvidia's ecosystem by increasing customer reliance on integrated CPU and GPU platforms while creating additional revenue streams across AI training, inference, networking, and future agentic AI applications.
Analysts See Significant Upside Despite Valuation Concerns
Several analysts argue that Nvidia remains attractively valued relative to its earnings growth outlook. The stock currently trades at roughly 25.4 times forward earnings, while analysts project earnings growth of more than 88% in fiscal 2027, followed by another 34% increase in fiscal 2028. Wall Street maintains a consensus Strong Buy rating, with an average price target of $303.71—implying approximately 46% upside from Nvidia's recent closing price of $208.64. The highest published target stands at $500 per share.
Utham argued that Nvidia remains attractively valued despite competitive pressures and potential margin risks. He believes the stock trades at a discount relative to slower-growing companies, with future upside increasingly supported by earnings growth rather than further valuation expansion.
For context on the broader tech landscape, see our coverage of Big Tech Earnings: Wall Street Demands Proof of AI Monetization on $725B Capex and AMD's Advancing AI 2026: Wall Street Eyes Key Catalyst for Stock. Additionally, the recent selloff in chip stocks is detailed in Dow Drops 486 Points as AI-Led Tech Selloff Intensifies, Chip Stocks Tumble.
This article is for informational purposes only and does not constitute financial advice.
