Aaron Rakers has covered Nvidia for years. He ranks in the top 1% of Wall Street analysts by performance. And when he builds a new model from scratch to justify a price target, the reasoning behind it is worth understanding.
He just did exactly that. And the number he landed on is not what most investors expected heading into earnings.
Wells Fargo raises Nvidia stock price target
Wells Fargo analyst Aaron Rakers raised his price target on Nvidia to $315 from $265 on May 12, maintaining an overweight rating. The new target implies approximately 44% upside from Monday, May 11’s close and is based on 21 times Wells Fargo’s calendar year 2028 EPS estimate of $14.85.
What makes this raise distinct from prior target increases is the analytical framework behind it. Rakers built a new gigawatt capacity-driven model to project Nvidia’s data center revenue, scaling from 9.2 gigawatts of AI infrastructure deployed in fiscal 2026 to 15.7 gigawatts in fiscal 2027, 20.8 gigawatts in fiscal 2028, and 25.2 gigawatts in fiscal 2029.
The gigawatt model and what it means for Nvidia’s data-center revenue
“With continued indications and commentary pointing to a compute demand greater than supply backdrop, we think a key factor driving NVDA‘s Data Center revenue is the company’s ability to scale gigawatts of AI infrastructure deployed,” Rakers said in a note to clients.
The revenue projections that flow from that model are substantial. Wells Fargo now projects data center revenue of $354.5 billion in fiscal 2027, $504.5 billion in fiscal 2028, and $628 billion in fiscal 2029, according to Investing.com. Those figures put Wells Fargo 4%, 11%, and 15% above consensus for fiscal years 2027, 2028, and 2029, respectively.
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Wells Fargo’s total company revenue estimates for fiscal 2027 and 2028 are now $378.9 billion with EPS of $8.45, and $530.6 billion with EPS of $11.95. The bank’s AI pipeline projection for Nvidia exceeds $1 trillion by 2027, CNBC noted.
Rakers also highlighted the Groq 3 LPX, a rack-scale AI inference accelerator designed for Nvidia’s Vera Rubin supercomputing architecture, as an additional source of upside beyond the core data center business.
The valuation case Wells Fargo is making, despite peak concerns
One of the more pointed aspects of the note is Wells Fargo’s direct engagement with the bear case. Despite peak share and margin concerns that have circulated among skeptics, Rakers argues that Nvidia, trading at less than 20 times price-to-earnings on what he views as durable 2027 consensus estimates, should be bought.
He also noted that Nvidia has traded at a median next-12-month price-to-earnings ratio of approximately 32 times over the past three years. At less than 20 times on 2027 estimates, he argues the stock is meaningfully below its historical average, despite the company’s stronger competitive position and larger addressable market than at any prior point in its history.
Wells Fargo also raised its Q1 fiscal 2027 revenue and EPS estimates to $80.4 billion and $1.79 respectively, compared with consensus of $78.1 billion and $1.74, ahead of the upcoming earnings report.
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Why the upcoming Nvidia earnings report is now even more important
Wells Fargo’s note arrived days before Nvidia is scheduled to report quarterly results. The timing is deliberate. A raised target ahead of earnings signals that the analyst believes the setup is favorable and that results will likely validate the revised model rather than challenge it.
Investors heading into the report will be watching for confirmation that AI infrastructure demand remains in a supply-constrained environment, that Blackwell platform revenue is tracking toward the levels embedded in Wells Fargo’s gigawatt model, and that Q2 guidance supports the $378.9 billion full-year fiscal 2027 revenue assumption.
If Nvidia delivers another beat-and-raise report, the $315 target may prove conservative almost immediately. Nvidia has historically outperformed the Philadelphia Semiconductor Index by approximately 30% in the three months following its annual GPU Technology Conference.
Key figures from Wells Fargo’s May 12 Nvidia upgrade:
- Wells Fargo new price target: $315, raised from $265, overweight maintained, analyst Aaron Rakers
- Implied upside from Monday’s close: Approximately 44%
- PT basis: 21x calendar year 2028 EPS estimate of $14.85
- Gigawatt capacity model: 9.2GW FY2026, 15.7GW FY2027, 20.8GW FY2028, 25.2GW FY2029
- Data center revenue projections: $354.5B FY2027, $504.5B FY2028, $628B FY2029
- Wells Fargo vs consensus: 4%, 11%, and 15% above Street estimates for FY2027, FY2028, FY2029
- Q1 FY2027 estimates: $80.4B revenue, $1.79 EPS versus consensus $78.1B and $1.74
- UBS separate buy rating on Nvidia: Price target $245
Source: Well Fargo May 12 note
What the Wells Fargo call signals about the broader AI trade
A target raise of this magnitude, from $265 to $315, is not a routine trim. It reflects a fundamental reassessment of the scale and durability of AI infrastructure spending. The gigawatt model Rakers built treats AI compute deployment as a physical infrastructure problem, not a software demand problem, which changes how the revenue ceiling is calculated.
If data center operators are committing to gigawatts of AI capacity years in advance, that creates a more durable and predictable demand signal for Nvidia than a typical enterprise software buying cycle. Wells Fargo’s model assumes that dynamic holds through at least fiscal 2029, which is why its estimates sit progressively further above consensus as the forecast horizon extends.
For investors tracking the AI semiconductor space, the note reinforces that Wells Fargo sees Nvidia not just as a beneficiary of the current AI buildout, but also as the foundational infrastructure layer for the next several years of that buildout.
Whether the May earnings report validates that framework is the most important question the quarter will answer.
Related: Goldman Sachs resets Nvidia stock forecast ahead of earnings
