A Bullish Signal? Wells Fargo Predicts 43% Upside for Nvidia Ahead of Earnings
Nvidia is scheduled to report its fiscal first-quarter 2027 results after the market closes next Wednesday, May 20.
Ahead of the highly anticipated print, Wells Fargo analyst Aaron Rakers has issued a ringing endorsement, raising his price target from $265 to $315 while maintaining an "Overweight" rating.
Rakers, whose track record ranks in the top 1% of Wall Street analysts, points out that while Nvidia trades at a P/E of 44.54x, its Price/Earnings-to-Growth (PEG) ratio sits at just 0.63.
This suggests the stock remains attractively valued relative to its explosive growth trajectory. His new target implies a potential 43% rally from Tuesday’s closing price.
The "Gigawatt Model": A New Engine for Revenue
In a departure from traditional valuation methods, Rakers built a proprietary model driven by gigawatt (GW) capacity to forecast Nvidia’s Data Center revenue.
The model estimates that the AI infrastructure capacity deployed by Nvidia will scale from 9.2 GW in fiscal 2026 to 15.7 GW in 2027, eventually reaching 25.2 GW by 2029.
"With all signs pointing to a scenario where compute demand continues to outstrip supply, we believe the key driver for Nvidia’s Data Center revenue is the company’s ability to expand the deployment of gigawatt-scale AI infrastructure," Rakers noted in a report to clients.
The resulting revenue projections are staggering. Wells Fargo now expects Data Center revenue to reach $354.5 billion in FY2027 and $504.5 billion in FY2028—figures that are 4% and 11% above consensus, respectively. Furthermore, the bank raised its total FY2027 revenue estimate to $378.9 billion with an EPS of $8.45.
Rakers also highlighted the Groq 3 LPX, a rack-scale AI inference accelerator designed for Nvidia’s Vera Rubin supercomputing architecture, as a significant growth driver beyond the core data center business.
Rebutting the Bears
Perhaps the most compelling aspect of the report is Wells Fargo’s direct challenge to Nvidia skeptics.
While bears fret over peak margins and potential market share erosion, Rakers argues the stock is a "buy" because its forward P/E—when calculated against 2027 earnings expectations—sits below 20x.
He explained that Nvidia’s median forward P/E over the past three years has been approximately 32x.
Given that the company’s competitive moat is now stronger and its total addressable market (TAM) larger than ever, trading at sub-20x 2027 earnings represents a significant discount to historical averages.
Adjusting the Q1 Bar
Heading into next week's earnings, Wells Fargo also nudged its fiscal Q1 revenue and EPS estimates higher to $80.4 billion and $1.79, respectively, both of which sit above the Wall Street consensus.
The timing of this report, issued just days before the official "report card," suggests high confidence that Nvidia's current momentum is not just a temporary beneficiary of the AI boom, but the fundamental "infrastructure layer" for the years to come.
For investors, the message is clear: the AI revolution is still in its early innings, and Nvidia remains the primary gatekeeper.