Nvidia (NVDA) Stock: Why This Analyst Sees 28% Rally Ahead

TLDR

• RBC Capital Markets starts coverage on Nvidia with Outperform rating and $240 price target
• Taiwan Semiconductor plans record $56 billion capital spending in 2026, up 37% from 2025
• Nvidia’s AI chip market share projected to fall from 80% to 70% by 2027
• Stock gained 2.1% Thursday on positive analyst coverage and supplier earnings
• RBC expects Big 4 hyperscalers to maintain elevated spending for next 12-18 months

Nvidia (NVDA) stock jumped 2.1% Thursday after Wall Street delivered a bullish call and its key manufacturing partner announced massive spending plans. The chip maker closed at $186.92 and added another 0.4% in after-hours trading.

NVIDIA Corporation, NVDA

RBC Capital Markets analyst Srini Pajjuri launched coverage with an Outperform rating and $240 price target. That target implies 28% upside from current levels. The timing comes as Nvidia has traded sideways for three months while investors questioned its AI dominance.

Taiwan Semiconductor Manufacturing reported fourth-quarter results that beat expectations. Net profit soared 35% year-over-year. The bigger news came from management’s capital expenditure forecast for 2026.

TSMC plans to spend up to $56 billion on capital investments this year. That’s a massive jump from the $41 billion spent in 2025. The figure also crushed analyst estimates. Such commitments don’t happen without strong demand signals from major customers.

TSMC manufactures Nvidia’s GPUs using cutting-edge semiconductor technology. The record spending level indicates TSMC sees sustained orders from Nvidia ahead. Production capacity remains the main bottleneck limiting Nvidia’s ability to fulfill customer demand.

Competition Heats Up

Nvidia controls roughly 80% of the AI accelerator market today. RBC projects that share will drop to 70% by 2027. Advanced Micro Devices and Google’s Tensor Processing Units are chipping away at the lead.

Tech companies want to diversify their chip suppliers. Google’s Gemini platform has gained traction recently. AMD continues pushing its competing AI chip products into the market.

Pajjuri isn’t worried about the market share decline. He points to Nvidia’s performance advantages and full-stack product ecosystem as defenses. The company’s expertise in rackscale deployments gives it an edge with data center customers.

Nvidia’s Rubin systems are in production now. These next-generation platforms should preserve the technical lead. The Groq roadmap offers additional options for future releases.

Hyperscaler Spending Continues

The RBC analyst expects major cloud providers to keep capital spending high for 12 to 18 months. The Big 4 hyperscalers have strong balance sheets supporting continued investments. Fierce competition drives them to build out AI compute infrastructure.

Industry observers have raised questions about circular financing arrangements. But Pajjuri believes these companies remain committed to investing. Their financial resources support ongoing infrastructure expansion.

Investor attention has shifted toward memory stocks in recent months. Nvidia hasn’t been the go-to AI play lately. The stock’s sideways movement reflects cooler sentiment around the name.

Some investors worried AI spending might peak. TSMC’s capital expenditure plan challenges that narrative. A 37% increase in planned spending suggests strong visibility into future demand. Manufacturing partners don’t commit billions without confidence in customer orders.

Nvidia shares rose to $187.72 in extended trading Thursday. The stock has traded between $86.62 and $212.19 over the past 52 weeks. Market capitalization stands at $4.5 trillion.

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