Nvidia shows 70% earnings growth potential in 2026

Bank of America Securities analyst Vivek Arya said skepticism around artificial intelligence (AI) spending is understandable but overstated, calling it a healthy correction within a long-term growth cycle. He said last week's 7–8% drop in large-cap AI chip stocks was driven by macro noise — such as U.S. government shutdown concerns, weak jobs data, tariff volatility, and misinterpreted OpenAI commentary — rather than any weakness in the AI spending cycle. Arya noted that ancillary AI sectors like memory and optical stocks rose about 14% during the same period, while Nvidia's recent $500 billion-plus data center order outlook for 2025–2026 reinforces that AI demand remains robust.

Meanwhile, private AI firms like OpenAI and Anthropic are rapidly attracting business customers, fueling continued enterprise adoption and pressure on public software and infrastructure providers to expand AI investment. Arya said Nvidia remains "particularly compelling," supported by strong data center visibility. Based on its current order outlook, Nvidia could grow sales and earnings per share by 50% and 70% year-over-year in 2026, respectively, while trading at an undemanding 24 times earnings multiple.

If global AI capital expenditures reach even half of Nvidia's $3–$4 trillion projection by 2030, the company could generate over $40 per share in earnings, implying that its current valuation prices in only modest AI growth. The analyst added that the noise surrounding China restrictions has little relevance to Nvidia's near- and medium-term fundamentals. The second event is AMD's analyst day, where Arya expects updates on its long-term GPU and CPU growth strategy as the company benefits from expanding AI demand. NVDA stock was trading 3.31% higher at $194.42 at last check on Monday.