Nvidia (NVDA) Looks Cheap on Piper’s Forecasts, but the Earnings Assumptions Are the Real Test

After spending years trading like a premium-priced AI leader, Nvidia may now be among the cheapest names in Piper Sandler's AI universe. NVIDIA Corporation (NASDAQ: NVDA ) is trading at an attractive valuation according to Piper Sandler's forecast, with rapid AI growth backing its trajectory.

On September 9, Piper Sandler analyst David O'Connor initiated coverage on NVIDIA Corporation (NASDAQ:NVDA) with an Overweight rating and a price target of $300, implying roughly 34% upside.

The firm believes that the chipmaker is an outright AI compute leader controlling 80% of the market by value and an estimated 50% by units. Owing to its annual cadence of next-generation products, it has been able to continue to drive the industry forward.

Piper Sees Nvidia Trading at Just 14x FY28 Earnings

Everyone knows and agrees that Nvidia has grown at an exponential pace. Its recent results offer evidence of operational strength as well. The company reported second-quarter fiscal 2027 revenue of $96.2 billion, up 106% year-over-year.

The chipmaker's data center revenue also surged 117% to $89 billion. GAAP gross margin was75%, while adjusted diluted earnings reached $2.22 per share. The figures highlight how Nvidia's robust demand is translating into profitability for the company.

According to Piper's note, Nvidia trades near 14 times estimated fiscal 2028 earnings. The firm calls it among the cheapest valuations in its AI universe, implying a PEG ratio of 0.3. Its price target is based on the 14x multiple applied to its calendar 2028 estimates, suggesting the bullish thesis relies more on Nvidia delivering the expected growth rather than on substantial multiple expansion.

Supply Constraints Support Demand, but Execution Risk Remains

Piper Sandler believes that AI compute supply is likely to be constrained for the next two to three years. While scarcity supports demand visibility, it can also lead suppliers to plan capacity before all future sales are certain. The key test is for Nvidia to execute on its annual product cadence as competitors attempt to reduce dependence on its GPUs.

As per the company's latest filings, Nvidia reported $985 million of quarterly provisions for inventory and excess purchase obligations, partly offset by releases. There was also a disclosure of a first-half charge of about $400 million related to H200 products amid China sales restrictions. The figures reflect how demand doesn't always eliminate inventory and regulatory risks.

The Real Test Is Piper's 47% Growth Forecast