Jefferies' Bullish Bet on NVIDIA: Assessing the 2028 Growth Flywheel

Jefferies is making a bold, long-term bet on NVIDIA, raising its price target to $275 from $250. That move implies a 45% upside from the stock's recent trading level and frames the investment as a wager on the company's ability to capture a massive, expanding market. The core of the thesis is simple: NVIDIA's valuation remains pretty cheap relative to its growth trajectory, especially when viewed through the lens of a newly extended forecast.

The bullish stance is anchored by a powerful narrative of a self-reinforcing growth engine. Jefferies analysts point to the company's updated AI model now extending through 2028, a revision that reflects stronger-than-expected demand for its data center accelerators. This long-term horizon is critical, as it suggests the firm sees the current surge in AI infrastructure spending as the start of a multi-year expansion, not a fleeting cycle. The foundation for this expansion is the staggering $4 trillion in AI infrastructure spending that NVIDIA itself has projected. Jefferies' model, which now stretches to 2028, is built on that massive total addressable market, betting that NVIDIA will continue to capture a dominant share.

The financials support the growth story. NVIDIA's revenue has surged 65% over the past year to $187.1 billion, a pace that underscores its market leadership. Yet, even with that explosive growth, the stock's valuation metrics appear attractive. Jefferies notes a PEG ratio of 0.77, suggesting shares are reasonably valued relative to their earnings potential. This disconnect between a soaring revenue base and a seemingly modest valuation multiple is what makes the stock look "cheap" to the firm. The expectation is that continued material earnings beats will eventually close that gap, driving the share price toward the new target.

Market Dominance and the Scalability Flywheel

NVIDIA's growth model isn't just fast; it's structural. The company's near-total control of the discrete GPU market provides the foundational scale to turn massive spending into a self-reinforcing engine. In early 2025, NVIDIA held about 92 percent of the discrete graphics processing unit market, with its closest rivals capturing a combined fraction of that share. This dominance isn't a minor lead-it's a moat. It means that for the vast majority of high-performance computing tasks, from gaming to AI training, the industry's choice is NVIDIA. That control translates directly into the capital surge fueling the entire AI buildout.

The scale of that spending is staggering. Through October 2025, nearly $1 trillion in AI infrastructure commitments had surfaced. This isn't a speculative bubble; it's a capital reordering where the biggest winners are now bankrolling the boom. The spending explosion is led by the hyperscalers-Microsoft, Meta, Google, and Amazon-who have committed over $750 billion to datacenter expansion between 2023 and 2025, with nearly $400 billion spent in 2025 alone. This creates a predictable, multi-year revenue stream for NVIDIA.

The genius of the flywheel is how it turns this spending into fuel for further growth. When hyperscalers spend, NVIDIA sells GPUs. The proceeds from these sales fund two critical paths: massive R&D for next-generation chips and strategic capital deployments. This isn't just about keeping up; it's about shaping the future. NVIDIA uses its war chest to invest in portfolio companies, taking equity stakes that simultaneously lock them into its ecosystem. For instance, a $5 billion investment in Intel isn't just a partnership-it's a bet that Intel will become a major customer for NVIDIA's own chips. The loop is elegant: NVIDIA Invests Capital and Takes Equity → Portfolio Companies Buy GPUs → Additional GPU Revenue → Portfolio Equity Appreciates → Larger War Chest → Repeat.

This mechanism creates a powerful, self-reinforcing cycle. Each dollar of GPU revenue not only funds the next generation of chips but also expands NVIDIA's influence across the infrastructure stack. The company is effectively using its own sales to secure future demand, control supply chains, and deepen customer lock-in. The result is a scalability flywheel where market dominance begets more spending, which begets more revenue and capital, which begets even greater dominance. For a growth investor, this isn't just a story of a leading company; it's a story of a company engineering its own growth engine.

Financial Metrics and Valuation: Growth vs. Price

For a growth investor, the ultimate question is whether the current price adequately reflects the projected trajectory. Jefferies argues that it does not, pointing to a compelling disconnect between explosive revenue growth and a seemingly modest valuation.

The growth story is undeniable. NVIDIA's revenue has surged 65% year-over-year to $187.1 billion over the past twelve months. This isn't a one-quarter pop; it's a sustained acceleration that underscores the company's dominant position in the AI infrastructure buildout. Yet, even with that soaring top line, the stock trades at a price-to-earnings ratio of about 47. That multiple, while elevated, is where the analysis gets interesting. The firm's key metric is the PEG ratio, which stands at 0.77. This figure suggests the stock is trading at a discount relative to its earnings growth rate, a classic sign of a "cheap" valuation for a high-growth company.

Jefferies expects this gap to close. The firm anticipates material earnings beats in upcoming quarters, with analyst estimates for the company's 2027 earnings moving higher over the next several quarters. This expectation is the engine behind the bullish price target. The thesis is that continued execution will drive earnings estimates up, which should, in turn, justify a higher multiple and propel the share price toward $275.

The bottom line is that NVIDIA's valuation, while not cheap by traditional standards, appears to be pricing in a slower growth path than Jefferies and many other analysts foresee. The PEG ratio of 0.77 is the clearest signal that the market may be undervaluing the sustainability of the company's growth flywheel. For a growth investor, that disconnect is the opportunity.

Catalysts, Risks, and What to Watch

For a growth investor, the path to the $275 target hinges on a few clear catalysts and a watchlist of potential disruptions. The immediate event to monitor is the next earnings report, which will serve as a critical litmus test for the flywheel's health. Investors should watch for two specific updates: any progress on chip exports to China and a clear signal of demand from hyperscaler customers. The approval for H200 chip sales to China has ignited strong order interest, and confirmation of sustained hyperscaler buying will reinforce the multi-year capital expenditure cycle that Jefferies' model depends on.

The competitive landscape is another key variable. While NVIDIA's lead remains formidable, with AMD gaining ground as a significant challenger, the ecosystem dynamics are complex. Major cloud providers are ordering significant volumes from both partners, indicating the market is large enough to support multiple suppliers. This competition could pressure margins or force faster innovation cycles, but it hasn't yet dented NVIDIA's dominant position in the discrete GPU market. The real risk here is not from AMD alone, but from any sign that hyperscalers are accelerating their own chip development to reduce reliance on external suppliers.

The most immediate market risk is the stock's recent underperformance. Despite the bullish analyst sentiment, NVIDIA stock has fallen 11% from its 2025 high and has trailed the broader market this year. This correction, occurring even as the Nasdaq 100 and S&P 500 hit new highs, could signal a shift in investor sentiment. If the next earnings report fails to deliver material beats or if demand from hyperscalers shows any cooling, the stock's momentum could falter further. For the growth flywheel to keep spinning, NVIDIA must consistently exceed expectations to justify its premium valuation and quell any doubts about the sustainability of its growth trajectory.