Not just record-breaking performance! Goldman Sachs identifies three major catalysts for Nvidia, stating bluntly that "the path to outperformance in the coming months is already clear."

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NVIDIA’s latest quarterly results and future guidance have comprehensively crushed Wall Street expectations. Goldman Sachs explicitly pointed out in its latest report that the path for this chip giant to outperform the market in the coming months has become exceptionally clear.

Driven by continuous strong capital expenditures from hyperscale cloud service providers, NVIDIA’s first-quarter revenue guidance far exceeded market consensus. According to Chase Trading Desk, Goldman Sachs analyst James Schneider and his team reiterated their “Buy” rating on the stock and maintained their $250 target price, meaning the stock still has nearly 28% upside from current levels. This move is expected to further boost market confidence in investment across the entire AI infrastructure sector.

The optimism in the market is not only due to the delivery of historical performance. Goldman Sachs proactively highlighted three core catalysts driving NVIDIA’s continued strength in its report: upward adjustments to hyperscale enterprise capital expenditure expectations, visibility on spending by AI startups post-financing rounds, and the launch of AI models based on next-generation architectures will again prove their technological moat.

In addition, NVIDIA’s recent deep strategic partnerships and multi-billion-dollar investment arrangements with top tech giants like Meta, OpenAI, and Anthropic not only fundamentally secure the future order base, but also bring widespread positive spillover effects to the global technology supply chain, including storage and semiconductor equipment.

Performance and Guidance Both Crush Market Expectations

NVIDIA achieved $68.1 billion in fourth-quarter revenue, not only higher than Goldman Sachs’ forecast of $67.3 billion but significantly exceeding Wall Street’s consensus of $66.2 billion. The core data center business remains the absolute engine, with single-quarter revenue reaching $62.3 billion. In terms of profitability, the gross margin of 75.2% and operating margin of 67.7% were both solid, with adjusted EPS at $1.76, comprehensively beating market expectations.

Even more eye-catching is its extremely strong future guidance. NVIDIA expects median first-quarter revenue to reach $78 billion, far above Wall Street’s forecast of $72.1 billion. Although the company, due to accounting changes, started to include about $1.9 billion in stock-based compensation expenses in its non-GAAP guidance, the comparable per share earnings guidance after removing this impact is $1.79, still significantly beating the market estimate of $1.67.

Three Core Catalysts Establishing Outperformance Path

Goldman Sachs stated clearly in its report that, unlike some past quarters, there are now three factors making it much clearer for NVIDIA to outperform the market in the coming months.

First, the 2026 capital expenditure forecast for hyperscale cloud vendors still has upside, and early signs of 2027 capital expenditure growth are already emerging, meaning demand support from NVIDIA’s core downstream customers will continue and extend further into the future.

Second, non-traditional clients represented by OpenAI and Anthropic will see significant improvement in procurement plan visibility out to 2027 as their respective financing rounds land. NVIDIA disclosed it is still actively negotiating investment and cooperation issues with OpenAI and expects to finalize the contract soon; meanwhile, it has completed a $10 billion investment in Anthropic, with the agreement including Anthropic training its large language models on Blackwell and Rubin architecture.

Third, as new-generation AI models trained on Blackwell architecture are successively launched to the market, NVIDIA will once again demonstrate its technical leadership over competing AI chip rivals in the coming months, providing the market with more direct evidence of differentiated competition.

Alliances with Tech Giants and Gross Margin Resilience Evident

In terms of business expansion, NVIDIA is solidifying its ecosystem moat through intensive investments and collaborations. The report notes NVIDIA is still actively negotiating investment and cooperation with OpenAI and expects to finalize the deal soon. Meanwhile, it has completed a heavyweight $10 billion investment in Anthropic, which will train its large language models on Blackwell and Rubin architectures. Additionally, NVIDIA announced a broad partnership with Meta to offer various data center products, and both sides will cooperate to deploy the Vera CPU in 2027, as well as introduce Vera Rubin NVL72 into scaled applications such as WhatsApp.

Regarding the highly watched issue of high-bandwidth memory price hikes eroding profit margins, NVIDIA has reassured investors. The company expects to maintain gross margin at around 75% mid-range throughout the 2026 calendar year. Goldman Sachs believes this gross margin resilience is mainly due to NVIDIA’s massive advance memory purchase commitments made in 2025.

Broad Supply Chain Spillover Effects and Potential Risks

NVIDIA’s strong data center guidance not only benefits itself but also sends a clear bullish signal for the entire semiconductor sector. Goldman Sachs emphasized this reflects an extremely solid AI spending environment, which is most favorable for digital semiconductor stocks like Broadcom and AMD, and to some extent beneficial to Marvell and ARM.

However, at the end of the report, Goldman Sachs also warned of four major downside risks for investing in the stock, including an unexpected slowdown of AI infrastructure spending, loss of market share due to intensifying competition, profit margin erosion from price wars, and supply chain shortages that have already emerged in the gaming business and will continue in the first quarter.

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