TLDR
- Nvidia stock rose 0.3% in premarket trading to $144.61 after falling 0.4% on Tuesday
- CEO Jensen Huang projects $40-50 billion revenue opportunity per gigawatt of AI datacenter capacity
- Data centers with 10GW capacity are breaking ground globally this year according to JLL research
- Forward P/E ratio remains below historical highs, similar to 2024 pattern before major price surge
- Worldwide data center construction could rise from $400 billion in 2024 to $1 trillion by 2028
Nvidia shares climbed in early Wednesday trading as investors weigh the chip maker’s long-term revenue potential from accelerating data center investments. The stock gained 0.3% to $144.61 in premarket activity.
The company has been in a holding pattern since surging from below $100 in late April. Its current market value sits at $3.52 trillion as investors seek justification for further gains.
CEO Jensen Huang’s revenue projections have caught analyst attention. He claims the company faces a $40-50 billion opportunity per gigawatt of AI datacenter capacity. Real estate firm JLL estimates 10GW of data center capacity will break ground globally this year.
This math suggests a multi-hundred billion dollar annual market for Nvidia. However, timing remains uncertain for reaching those revenue levels.
UBS analyst Timothy Arcuri ran the numbers on current hardware pricing. He calculated Nvidia can only receive about $24 billion per gigawatt based on average Blackwell chip prices.
Revenue Timeline Questions
The gap between current and projected revenue per gigawatt points to future product cycles. Arcuri believes the $40-50 billion figure refers to next-generation Rubin Ultra NVL576 chips in the 2027-2028 timeframe.
Recent financial results show the business momentum continues. Q1 revenue jumped 69% year-over-year to $44 billion despite China sales restrictions. The company still expects 50% revenue growth next quarter.
European data center construction is picking up pace. Nvidia announced multiple AI “factories” under construction across Europe as the region joins the AI infrastructure buildout.
Third-party projections support the growth narrative. Nvidia cited estimates showing worldwide data center construction topped $400 billion in 2024. The same projection forecasts $1 trillion in spending by 2028.
Valuation Patterns
The stock’s valuation metrics show interesting patterns compared to 2024. During last year’s first half, investors questioned analyst earnings projections. This kept the forward price-to-earnings ratio relatively low.
Recognition of sustained growth eventually pushed the stock higher. By year-end, Nvidia traded in the mid-40s forward P/E range as skepticism faded.
Similar dynamics appear to be playing out now. The forward P/E ratio is creeping upward but remains well below those historical highs from 2024.
Nvidia generated $115 billion from data center GPU sales in fiscal 2025. If spending projections prove accurate and market share holds steady, significant upside potential exists.
Other chip stocks moved higher alongside Nvidia in premarket trading. Advanced Micro Devices gained 1.9% while Broadcom rose 0.4%.
The company’s GPU dominance in AI training continues across hyperscale customers. Parallel processing capabilities give these chips advantages in machine learning workloads compared to traditional processors.
China sales restrictions have created some headwinds for revenue growth. However, demand from other regions appears strong enough to maintain impressive growth rates.
European AI infrastructure investments represent a new growth avenue. Multiple data centers filled with Nvidia GPUs are under construction as the region increases AI spending.
The forward P/E ratio currently trades below the mid-40s level reached in 2024 when growth expectations were validated by results.
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