Here's the Reason Nvidia Stock Could Increase twofold by 2026

Why Nvidia's Stock Might Double by 2026

Key Highlights:

• The market is not fully appreciating Nvidia's growth prospects for 2026.
• The companys significant backlog, potential margin improvements, and recent developments in its Chinese business could push Nvidia beyond expectations in the coming year.

In 2025, Nvidia (NASDAQ: NVDA) became the largest company in the world, briefly reaching a $5 trillion market cap. The semiconductor leader also achieved another strong year of returns for investors, with the stock rising 36% year-to-date, despite occasional setbacks.

However, recent investor sentiment has been less positive, with Nvidias stock falling by 9.7% since early November. Worries about the artificial intelligence (AI) infrastructure market, concerns over an AI bubble, and doubts about the sustainability of AI capital spending have weighed on the stock recently.

Despite these challenges, theres a strong possibility that Nvidia will recover and see remarkable growth in 2026. In fact, the stock could even double by the end of the year. Heres why Nvidia could see significant gains in the next couple of years.

The Market is Underestimating Nvidia's Growth Potential

Nvidia has consistently maintained exceptional growth rates, even with a high revenue base. The company is set to close its fiscal year 2026 (ending January 31, 2026) with $213 billion in revenue, marking a 63% increase from the previous year. Analyst estimates predict a 57% earnings growth this year, with earnings per share (EPS) expected to reach $4.69.

Looking ahead to fiscal 2027, analysts project Nvidia's revenue will rise by 48%, reaching $316 billion, with EPS growth accelerating to 59%, resulting in $7.46 per share. Recently, analysts have revised Nvidia's earnings estimates for 2026 upward, driven by anticipated faster revenue growth and improved margins.

For the current quarter, Nvidias revenue forecast suggests a 65% year-over-year increase, indicating strong momentum heading into 2026. This positive outlook is supported by a massive backlog. The companys AI chip order book for 2025 and 2026 totals $500 billion, placing Nvidia in a favorable position for faster-than-expected growth.

A Massive Backlog Fuels Growth

In 2024, Nvidias data center segment generated $167 billion in revenue. For the current quarter, the company is on track to earn $58 billion from data centers, which accounts for around 90% of total sales. With $225 billion in chip sales over the last five quarters, Nvidias data center backlog for the next year could be $275 billion.

Furthermore, the $500 billion backlog isnt a fixed cap, as Nvidia continues to receive new orders. CFO Colette Kress recently stated that the backlog is expected to grow even further, opening up additional growth opportunities. Moreover, Nvidia has received approval from the Trump administration to sell its H200 data center GPUs to China, which could lead to even greater growth in 2026.

Profit Margins and Earnings Potential

Nvidia anticipates maintaining a gross margin in the mid-70% range for 2026, a slight increase over this years margin. In the last fiscal year, non-GAAP gross margins were 71% in Q1, increasing to 72.2% and 73.6% in the following two quarters. As margins improve and revenues surpass expectations, Nvidias earnings growth could exceed the 59% analysts are forecasting.

Why Nvidia Stock Could Double

If Nvidia achieves even 65% earnings growth next year, its EPS could rise to $7.74, up from the expected $4.69 for this year. This growth rate is far higher than the 14% anticipated for the broader S&P 500. Currently, Nvidias stock trades at 29 times forward earnings, which is significantly lower than the tech sector's average multiple of 46.

Given Nvidias expected earnings growth and potential to outperform market expectations, the stock is likely to receive a higher valuation. If it trades at the sector average of 46 times earnings and hits $7.74 per share, its stock price could rise to $358close to double its current value. This suggests that Nvidias stock remains a strong buy heading into 2026.

Sources:

• Here's Why Nvidia Stock Could Double in 2026