- KeyBanc raised its Nvidia price target to $275 from $250 and reiterated Overweight after a strong fiscal Q3 and upbeat outlook.
- Strength was led by Data Center growth and a mix shift toward Blackwell Ultra, with GB300 representing about two-thirds of Blackwell revenue in Q3.
- KeyBanc cites roughly $57B in Q3 revenue (about $51B from Data Center) and models a $500B Blackwell/Rubin pipeline for FY2026–FY2027.
- Key risks include supply/capacity constraints, China export limits (with no China revenue assumed in Q4), and a premium valuation.
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Drivers of KeyBanc’s Upgrade
KeyBanc’s increase in NVIDIA’s one-year price target to $275 (from $250) is grounded on the company’s stronger-than-expected Q3 fiscal 2026 results. Total revenue came in at around $57 billion, beating forecasts, with Data Center revenue of approximately $51 billion—both marking 60-plus percent year-over-year growth. The firm points specifically to the Blackwell Ultra line, noting that GB300 chips now represent two thirds of Blackwell revenues, and that the Blackwell/Rubin pipeline across fiscal years 2026-2027 is already modeled at $500 billion, serving as a conservative baseline which may further expand.
Valuation & Margin Considerations
Despite the strong sales growth, the stock trades at a high P/E (noted around 53×), which could constrain further upward revisions unless upside delivery continues. KeyBanc assumes no revenue from China in Q4, reflecting risk of regulatory constraints. Capacity—or supply chain constraints—also remains a concern, particularly in ramping up GB300/Blackwell Ultra production.
Strategic Implications
NVIDIA’s dominance in the AI infrastructure market seems likely to continue, with Blackwell Ultra/GB300 products pulling ahead and driving margin leverage. The enormous Blackwell/Rubin pipeline suggests multi-year tailwinds. For investors, the upside appears to be balanced by execution risk: ability to sustain margins, deliver high yields, and mitigate geopolitical/regulatory risks. Competitors like AMD will find it increasingly difficult to match this momentum absent similar scale or architectural leaps.
Open Questions
Key unresolved issues include: (a) how much revenue China might contribute if export/licensing restrictions ease or tighten; (b) whether NVIDIA can scale supply and manufacturing yields (especially for GB300 racks) without dilution of margins; (c) how realistic the $500 B pipeline forecast is under various macroeconomic stressors; and (d) valuation sensitivity if growth slows or competition intensifies.
Supporting Notes
- KeyBanc raised its target price from $250 to $275 and upheld an Overweight rating, attributing this to strong Q3 results.
- Q3 revenue recorded at approximately $57 billion, driven by Data Center revenue of ~$51 billion, both ~60-65% YoY growth.
- GB300 reached crossover point, making up two thirds of Blackwell revenues in Q3.
- A projected $500 billion Blackwell/Rubin sales pipeline for fiscal 2026-2027 is considered a foundational assumption.
- Assumption in Q4 guidance excludes revenue from China, indicating regulatory/geographic risk.
- P/E ratio estimated at ~53×, pointing to a valuation premium relative to growth.