J.P. Morgan: Reiterates NVIDIA's "Overweight" rating, with multiple incremental revenue sources providing significant upside potential for market expectations

JPMorgan issued a research report saying that at an analyst meeting, NVIDIA revealed that as of 2027, procurement orders and demand for Blackwell and Vera Rubin exceed $1 trillion, but these figures are only a lower bound, as they do not include Groq LPU racks, standalone Vera CPU, storage systems, and Rubin Ultra—each of which represents a different level of incremental revenue source. NVIDIA’s goal is to use about 50% of free cash flow for capital returns through share buybacks and dividends, up from about 42% in fiscal year 2026, implying a combined total of more than $200 billion in 2026 and 2027. In addition, the firm noted that NVIDIA management strongly defends the sustainability of gross margin, redefining competitive advantage as factory-level tokenomics rather than chip-level pricing, and dismissing the argument that cheaper chips fundamentally misunderstands its business. Management said that about half of data center revenue is driven by a structural shift from CPU workloads to accelerated computing, which is driven by structural demand factors independent of AI training and inference cycles, and still has substantial room for growth. The firm believes that multiple incremental revenue sources for NVIDIA, which were not considered a year ago, provide significant upside to its current market expectations, and as the company’s competitive position continues to expand, it reiterates its “Overweight” rating, with a target price of $265.