Short-term pressure, but Goldman Sachs believes "NVIDIA has huge upside potential in 2026," providing three main reasons

While the market is still concerned about NVIDIA's short-term stock performance, Wall Street's top investment banks are looking ahead to 2026.

According to reports from the Wind Trading Desk, Goldman Sachs' research report on August 27 indicated that NVIDIA's second-quarter earnings report and third-quarter guidance were generally in line with market expectations. However, in the context of previously high valuations, NVIDIA's stock price may face moderate downward pressure in the short term.

Nevertheless, the bank maintains a "Buy" rating on NVIDIA and holds an extremely optimistic view of its performance in 2026, pointing out that the company will have significant upside potential by then.

Goldman Sachs analyst James Schneider's team has set its 2026 earnings per share (EPS) estimate well above Wall Street consensus, approximately 10% higher, and provided three core reasons supporting this judgment.

Next-Generation Platform "Rubin" Poised for Launch

Goldman Sachs views NVIDIA's next-generation product roadmap as a core pillar of its bullish outlook. The report clearly states that NVIDIA's next-generation platform "Rubin" has entered the early manufacturing stage and is expected to achieve mass production by mid-2026.

According to the report, NVIDIA's management revealed that all six chips constituting the Rubin platform have begun trial production. Although technical details are limited, management is optimistic about Rubin's significant improvements in workload performance, efficiency, and cost-effectiveness compared to Blackwell.

The bank's forecasting model also indicates that Rubin will begin to become an important component of GPU shipments in 2026, opening a new product-driven growth cycle for the company.

Customer Diversification, Sovereign Client Contributions Double

NVIDIA's growth story is becoming increasingly diversified. Goldman Sachs' report emphasizes that the company's customer base is continuously expanding, reducing its over-reliance on a few hyperscale cloud service providers (CSPs). Data shows that large cloud service providers currently account for 50% of data center revenue, which precisely demonstrates the rise of other customer groups.

Notably, the most remarkable growth comes from non-traditional clients, especially sovereign AI projects. According to NVIDIA's management, revenue from sovereign clients is expected to exceed $20 billion by 2025, more than doubling compared to 2024. This strong momentum indicates that the global demand for building autonomous AI infrastructure is opening up a brand new, massive incremental market for NVIDIA.

Hyperscale Computing and Emerging Demand Drive Growth

Goldman Sachs believes that NVIDIA's significant upside potential in 2026 will be driven by both traditional advantages and emerging opportunities. The report states: "We maintain our Buy rating based on our anticipation of significant upside opportunities in 2026, driven by increased spending from hyperscale cloud service providers and demand from non-traditional clients."

This means that Goldman Sachs is not only optimistic about the explosive potential of new demands such as sovereign AI but also believes that hyperscale cloud service providers, which form the foundation of NVIDIA's business, will continue to increase their investments in AI infrastructure This "dual-engine drive" pattern provides a high degree of certainty for NVIDIA's future revenue and profit growth. Based on this judgment, Goldman Sachs has given a profit forecast for 2026 that is above market consensus and believes that the current short-term fluctuations provide a good opportunity for long-term investors to position themselves.

Short-term challenges remain but do not change the long-term logic

Although NVIDIA's business in China currently faces uncertainties due to export restrictions, such as the Blackwell product export license and demand for H20 products, management is actively communicating with the U.S. government to seek approval for the sale of Blackwell-based products in China, and the H20 ban has been lifted, with some customer licenses already approved.

If the relevant uncertainties are resolved, NVIDIA expects third-quarter shipments of H20 products in the Chinese market to reach between $2 billion and $5 billion. This indicates that the potential recovery in the Chinese market will also provide additional momentum for NVIDIA's growth in 2026.

Goldman Sachs analysts believe that despite facing geopolitical challenges and production ramp-up pressures, NVIDIA's long-term growth logic remains strong, and 2026 will be a key year for explosive growth