Nvidia Stock Builds Bullish Base, Tests Key Support Level With Earnings Seen Soaring 70%

The artificial intelligence revolution is still in the early innings and chipmaker Nvidia (NVDA) is testing a key level even as it builds a bullish base amid powerful earnings growth.

The Santa Clara, Calif., company is arguably the most important player in the AI space. Its Blackwell series of graphics processors is widely considered the gold standard in hardware. Its Grace series of central processing units means Nvidia now offers a so-called full stack for data centers.

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With a $4.4 trillion market cap, Nvidia is the most valuable publicly traded company. But Nvidia stock is currently testing buyers at its 50-day moving average. One point of concern among investors is whether high levels of capital expenditure will be sustainable. Hyperscalers like Microsoft (MSFT), Google parent Alphabet (GOOGL) and Amazon.com (AMZN) account for just over 50% of data center revenue.

However, Nvidia’s most recent quarterly report showed that the fastest growth in that segment was coming from outside that group.

Analysts have also flagged that the benefits of AI must start to filter through to other companies. As efficiencies accrue, it should bolster the stock. But if benefits fail to materialize, it could hinder broader adoption of the technology and harm Nvidia.

New System Set To Ship

The combined Grace-Blackwell Superchip solves the bottleneck between the processor and the accelerator. It is also more energy-efficient, a key concern given how much electricity AI data centers use.

The company’s new Vera Rubin system is set to ship in the second half of the year. It uses twice the power of Blackwell, but offers 10 times more performance per watt. It is a six-chip platform that includes a Vera CPU and a Rubin GPU, which Chief Executive Jensen Huang said were “codesigned from the start” to enable faster data sharing.

Arguably its biggest moat is in software, however. Its Compute Unified Device Architecture (CUDA) software platform allows developers to harness the power of the chips effectively, and is the rock on which most AI enterprise tools and libraries are built. While raw chip leadership can be eroded, the wide adoption of CUDA means benefits from this industry standard platform should compound over time. Even if a rival develops a more powerful set of chips, switching costs would be high.

Nvidia’s stock price has soared in recent years, rallying as much as 1,863% from its 2022 low of 10.81. And with analysts expecting earnings to rise 70% in fiscal 2027, there is plenty of growth ahead that could help drive the stock higher still.

Nevertheless, bears will say such powerful gains call into question whether much of the growth is already baked into the stock price. However, its price-to-earnings ratio, which measures a share price relative to per-share earnings, sits at 39, just 1.6 times the S&P 500 average.

Earnings Performance Key For AI Stock

Nvidia stock boasts outstanding all-around performance, which is reflected in its best-possible IBD Composite Rating of 99.

Fundamental strength is the secret sauce here, with its Earnings Per Share Rating also standing at 99. In the January-ended quarter, earnings soared 82% to $1.62 per share, well clear of calls for $1.54. Revenue jumped 73% to $68.1 billion, which was $2 billion above expectations.

Data center revenue totaled $62.3 billion, accounting for 91% of total revenue. Nvidia forecast fiscal first-quarter revenue of $78 billion, plus or minus 2%. Analysts expected $72.9 billion.

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Wall Street sees per-share earnings surging 70% in fiscal 2027 to $8.10. This is expected to slow to 32% growth the following year, MarketSurge data shows.

In contrast, price performance is a relative weakness. But even with this caveat, Nvidia ranks among the top 23% of equities tracked by IBD in terms of technical strength over the past 12 months.

Nvidia Stock Analysis

The AI stock has formed a consolidation with an ideal buy point of 212.19, according to MarketSurge analysis. This is an early-stage pattern, which is favorable. IBD research has found younger bases are more likely to net good gains.

As the stock tests its 50-day line, finding support at this important technical benchmark would be a solid sign. The stock’s relative strength line has been moving sideways since early August, so an upward spike would help fuel a breakout.

So far in 2026, the stock has fallen by around 2%. This means it is actually underperforming the benchmark S&P 500’s fractional year-to-date gain.

However, institutions have been buying shares of late, indicated by the Accumulation/Distribution Rating of B-. In total, 51% of shares are held by funds, MarketSurge data shows.

Noteworthy holders include the lauded Fidelity Contrafund (FCNTX), the Franklin Growth Fund (FKGRX) and the MFS Growth Fund (MFEGX).

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Analysts Back Nvidia Stock

Wall Street is currently bullish on the AI play. It holds a consensus rating of strong buy with an average price target of 273.38, according to TipRanks.

Wedbush analyst Matt Bryson is even more enthusiastic, rating it as outperform with a 300 target. Acceleration in data center sales “was impressive given the law of large numbers,” he said in a Feb. 26 research note following Nvidia’s fourth-quarter report.

But Nvidia’s first-quarter sales outlook guidance of $78 billion was the highlight, as it was “well in excess of prior buy-side expectations,” Bryson said. He noted this is especially the case if management “is again leaving a couple billion dollars of cushion to again deliver upside when it comes time to report.”

UBS analyst Timothy Arcuri, in a Feb. 26 note to clients, said “it is hard to see how the stock continues to languish” if year-over-year growth starts to reaccelerate in the second half of the year. Arcuri rates Nvidia stock as a buy with a 245 target.

Eye On Broadening AI Benefits

CFRA analyst Angelo Zino is also bullish, rating it as a strong buy with a 250 target. However, it is important that other companies begin to show benefits from AI, he said.

“We believe that NVDA’s growth is being supported by rising hyperscaler capex (over half of sales), but we think investors need to see greater signs of successful AI monetization from its customer base in a year where CEO Jensen Huang sees Agentic AI at an inflection point,” Zino said in a research note.

Please follow Michael Larkin on X at @IBD_MLarkin for more analysis of growth stocks.

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