Prediction: Nvidia stock will be worth this much by the end of 2027

Nvidiathe stock (NVDA +2.87%) closed at a record high of $239.24 per share on October 6. But today, shares of the AI ​​chipmaker are trading at around $175. Let’s take a look at what caused this 27% drop and where Nvidia shares could be trading by the end of next year.

Why was Nvidia the hottest AI stock?

Nvidia is the world’s largest producer of discrete GPUs. The company originally sold most of these chips to PC gamers, but it now generates the bulk of its revenue from the data center market.

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Unlike CPUs, which are optimized for fast sequential processing, GPUs are designed to run thousands of calculations simultaneously thanks to massive parallelism. This key difference makes GPUs better suited to training AI models than standalone processors.

Nvidia’s first-mover advantage has allowed it to dominate the AI ​​data center market with its chips, and lock in those customers with its proprietary software and services. Today, most of the world’s largest AI companies, including Anthropic and OpenAI, use Nvidia GPUs.

From fiscal 2021 to fiscal 2026 (which ended in January), Nvidia’s revenue increased from $16.7 billion to $215.9 billion, while its net income increased from $4.3 billion to $120.1 billion. Even after its latest decline, its stock is still up about 1,210% over the past six years.

Why did Nvidia shares fall?

Nvidia’s market dominance and meteoric growth have made it one of the easiest ways to profit from the AI ​​boom. But with 93% of its revenue coming from the data center market in its most recent quarter, it could only maintain its momentum if AI companies continued to buy more chips.

Over the past year, the war in Iran, inflation and the Fed’s September interest rate hike have caused more investors to question this bullish thesis. As the costs of building new data centers outpaced the monetization of new AI services, it became harder to justify these expenses.

The Democratic victory in the November 3 midterm elections exacerbated this pressure. Several newly elected officials, including Texas Governor-elect Gina Hinojosa, have called for moratoriums on new data centers until stricter regulations are put in place.

On November 8, Nvidia co-founder and CEO Jensen Huang admitted to having an extramarital affair in a public company memo. Huang didn’t name anyone, but major media outlets pointed the finger at Megaspeed executive Alice Huang. This Singapore-based cloud computing company has spent at least $4.8 billion on Nvidia data center chips over the past three years.

This partnership alone did not violate any laws. However, Megaspeed allegedly sold these AI chips to Chinese technology companies and violated export restrictions against China. Several reports have also called Alice Huang a Chinese spy, an allegation China denies.

These accusations are troubling because another major Nvidia customer, based in California, Supermicro (SMCI +9.50%)has recently been the subject of similar allegations. Supermicro co-founder Yih-Shyan Liaw and two others were recently indicted for conspiring to smuggle $2.5 billion worth of Nvidia-powered servers into China through Asian shell companies.

It’s unclear whether Nvidia turned a blind eye to these activities or simply failed to keep up with them, but the allegations prompted the company’s board to open an internal investigation. It also faces new government investigations and a massive class-action lawsuit from its shareholders.

Where will Nvidia stock be by the end of 2027?

Nvidia continues to grow rapidly and market demand for its chips still exceeds its supply. From FY 2026 to FY 2029, analysts expect its revenue and EPS to both grow at a CAGR of 61%. That’s an incredible growth rate for a stock that’s 17 times this year’s earnings.

However, Nvidia shares could continue trading at this discount if they don’t resolve their most pressing problems. In a worst-case scenario, in which Nvidia’s board fires Jensen Huang, Nvidia shares could fall much lower before being considered a bargain.

But even in a best-case scenario, in which Huang resists internal and government investigations, Nvidia’s valuations could remain depressed as the company battles macro-level headwinds. I don’t think Nvidia’s board will actually oust Huang, as that would crush his own stock, but I also don’t see the company recovering from this scandal by the end of next year. Therefore, I expect it to trade sideways – or rally slightly – by the end of 2027 instead of rallying again.