I Predicted That Nvidia Would Beat the S&P 500 for the 3rd Consecutive Year in 2025. Here's Why the Streak Can Continue in 2026.

Core Viewpoint - Nvidia is positioned as a fundamentals-led growth story, outperforming the S&P 500 with a 38.9% increase compared to the index's 16.4% gain, and is expected to continue this trend into 2026 [1]. Group 1: Financial Performance and Projections - Nvidia forecasts reaching $500 billion in Blackwell and Rubin booked orders, with expectations to exceed this guidance as orders increase [2]. - Analysts have raised earnings estimates for Nvidia, projecting fiscal 2026 earnings per share at $4.69 and $7.60 for fiscal 2027, up from previous estimates of $4.29 and $5.76 respectively [4]. - Nvidia's fiscal 2027 ends in late January 2027, indicating that the financial benefits from Rubin will likely start in the second half of fiscal 2027 [4]. Group 2: Product Development and Efficiency - Nvidia announced six new Rubin chips, including a GPU and CPU, with full production of Rubin expected and deliveries in the second half of calendar year 2026 [3]. - Rubin has achieved significant efficiency improvements, including a 90% reduction in inference token costs and a 75% reduction in the number of GPUs needed for AI model training [6]. - The company justifies high pricing for Rubin products due to their expected performance improvements, which will lower operating costs for data centers [7]. Group 3: Market Position and Demand - Nvidia's innovation is expected to sustain high margins and maintain competitiveness against rising competition [9]. - Key customers of Nvidia are highly profitable companies, indicating strong demand for AI solutions, which supports a forward price-to-earnings ratio of 39 [10]. - Current demand for Rubin suggests that AI spending remains robust, providing confidence in Nvidia's ability to reward long-term investors [10].