NVIDIA Breaks Out to New Highs: What Comes Next?

Key Points

• NVIDIA's stock price breakout has significantly bullish implications for its direction and the S&P 500.
• Analysts and technical trends suggest a minimum of 20% upside lies ahead, relative to the early October breakout point.
• The Q3 earnings report could accelerate the rally into year's end.

NVIDIA NASDAQ: NVDA stock rose to set a new high in early October, signaling a continuation of the rally. The market, despite the uncertainty and headwinds caused by inflation, tariffs, and geopolitical tension, determined that the revenue and earnings growth outlook offset the risks, and the stock is undervalued. NVIDIA’s breakout also means the S&P 500 index NYSEARCA: SPY will most likely follow it higher.

NVIDIA isn’t a cheap stock, trading at roughly 42x its 2026 earnings consensus. However, this premium company merits a premium valuation, and its growth outlook remains a key factor. The 42x price multiple also accounts for significant growth: the P/E ratio falls to only 29x next year’s earnings outlook, 21x the 2030 consensus target, and 11x the 2035 figure, suggesting this stock could increase by nearly 300% in the coming years. 

The factor driving the market higher so quickly is the rising earnings consensus for this year and each of the following years out to 2035. The increasing consensus is due to a trend of upward revisions that provide a lift to sentiment and deepen the valuation. The revision trend is driven by pipeline growth, as new deals are added to the list weekly. Not only is NVIDIA expanding its partnerships and data center footprint, but companies such as CoreWeave NASDAQ: CRWV, which offer advanced GPU-as-a-service for AI developers and workloads, are also expanding theirs. CoreWeave, for one, recently announced a $14 billion deal with Meta Platforms NASDAQ: META that builds upon an earlier agreement. 

NVIDIA Technical and Analyst Trends Lead to $250: 20% Upside in October

The technical and analyst trends are robust, and indicate a move to the $250 to $260 level, potentially higher if the subsequent earnings report and deal volume are bullish. Technically, this market is blowing past the initial targets set when it broke out of its trading range in June. The action since reveals that the range was a minor hiccup in a vigorous rally that has yet to play out. The price action in August and September reveals the true strength of this market, as the summer rally did not peak until it achieved a 100% price gain. 

The summer rally, from the April low to the September high, is worth approximately $90, or around 100%, which is the projection for where the stock is heading now. The base case is a movement equivalent to the dollar value, or $90, which places NVIDIA stock near $260, or slightly above the analysts’ high-end range. 

The analyst trends align with the rapid increase in NVIDIA's share price this year. They include increasing coverage, broad market support with 44 analysts tracked by MarketBeat, firming sentiment with a bullish bias to the Moderate Buy rating, and an uptrend in the price target. As it stands, the consensus, which has increased by 50% in the preceding 12 months, forecasts a 12% upside from the critical breakout point, while the high-end range is $250, aligning with the technical target. 

NVIDIA’s Breakout Means the S&P 500 Will Trend Higher 

The S&P 500’s movement is not tied to a single stock, but NVIDIA, of them all, has the most influence on its direction. It is the largest company by market cap and the single largest holding in the index, accounting for approximately 8% of the index. The critical detail is that AI-driven spending is also focused on the other eight of the top nine holdings, which represent 37%, and are trending higher as a group, with all trading at or near record highs. The S&P 500 broke to new highs alongside NVIDIA, confirming an uptrend with targets in the 7,400 to 7,600 range on the index.