NVIDIA Corp (NVDA) USD0.001

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There were several announcements last night, the main revolved around updated guidance that now pushes out to 2027. Nvidia expects to deliver at least $1trn of data centre revenue over the calendar year period of 2025-2027 (previous guidance: $500bn 2025-2026).

That equates to over $500bn of data centre revenue expected in 2027 (consensus pre-announcement: $456bn of total revenue - which includes a relatively small contribution from non-data centre business).

Nvidia confirmed that its latest platform, Vera-Rubin, was shipping to customers. A new chip leveraging the recent $20bn deal with Groq will be integrated into all new platforms, creating a 7-chip system.

The shares closed 1.6% higher on the day.

Our view

Hot on the heels of a monster quarter, Nvidia used its tech conference keynote to expand the scale of its medium-term opportunity, guiding to $1trn of data centre revenue across 2025–2027. As usual, Wall Street consensus is well below that number, having around 30% total revenue growth pencilled in for calendar year 2027. That needs to come closer to 45% to get anywhere near Jensen’s new guidance and push well past 50% to match our numbers.

Recent deals with OpenAI, Meta, and even the UK government, along with commentary on insatiable demand for the latest chip stacks, cement our view on Nvidia’s leadership position. But key customers are exploring viable alternatives, at least on paper, as they seek more computing capacity and diversification away from a single supplier. The real question is how those other options stack up in practice.

Nvidia’s breadth remains underrated: a full data centre business spanning chips, software, networking and more. Its chip architecture is evolving rapidly, with new products released annually that deliver more computing power and significantly better energy efficiency. Rivals can offer parts of the stack, but Nvidia’s AI-factory approach is hard to beat.

The growth we're seeing is impressive, especially given that it has effectively been shut out of what was once a core market, China. Sales of its deliberately reined-in chips are struggling to secure the necessary approvals, and we are less confident about a near-term resolution than in the past.

Two questions persist: can the current AI spending wave sustain growth beyond the next few years, and will Nvidia remain as dominant as AI shifts from training models to everyday inference?

On the former, we think it can, given the breadth of emerging AI use cases and our checks showing that demand for AI compute is as strong as ever. On the latter, we were pleased to see this tackled head-on at the tech conference, with new chips integrated into the stack to help improve performance in this area.

Still, the uncertainty isn’t budging, and helps explain why the shares trade at only a modest premium to the wider market on a forward price‑to‑earnings basis, despite exceptional growth.

That doesn’t mean there’s no upside - for now, the sheer weight of earnings growth and cash generation can continue to do the heavy lifting, and that’s why it’s one of our Five Shares to Watch picks for 2026. Key risks centre on AI sentiment and hiccups in the AI buildout, both of which could weigh on valuation and growth expectations.

Environmental, social and governance (ESG) risk

The semiconductor sector is medium-risk in terms of ESG. Overall, this risk is managed adequately in Europe and North America but has considerable room for improvement in the Asia-Pacific region. Its reliance on highly-specialised workers means labour relations is one of the key risk drivers. Other risks worth monitoring include resource use, business ethics, product governance, and carbon emissions.

According to Sustainalytics, Nvidia’s management of material ESG risks is strong.

As the market leader in power-hungry GPU processors it’s recognised for paying close attention to the energy efficiency of its products. Business ethics concerns are addressed by Nvidia’s compliance committee, which comprises the CFO and several other senior managers. Additionally, a third-party hotline is available for both employees and third-party stakeholders to anonymously submit ethical concerns. Its human capital initiatives are also strong, which is reassuring given the talent gap in the industry. However, diversity amongst the workforce could still be improved.

The author owns shares in NVIDIA.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.

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