Safra begins coverage of Nvidia (NVDA) and expects a 40% increase in big tech shares; see why

The Banco Safra announced the start of coverage of Nvidia (NVDA) with recommendation outperform (the equivalent of the purchase) and with a target price for the end of 2026 of US$300 per share, which represents an appreciation potential of around 40%.

“Nvidia is a semiconductor company and global leader in computing, acting across the entire chain of processors, networks and software that form the computational backbone of the expansion of artificial intelligence”, say analysts Guilherme Bellizzi Motta and Silvio Dória, who signed the report.

The analysis is based on four pillars: Nvidia’s competitive advantage over the competition, optimization of the hardware and softwareimprovements in the inference process (i.e., execution of tasks with AI) and accelerated demand for GPU segments focused on artificial intelligence.

Also according to analysts, the main risks to the thesis include concentration of customers between companies hyperscalers (cloud service providers and data centers) and the possible slowdown in investments in infrastructure AI (capex).

Also on analysts’ radar is competitive pressure for high-performance chips and exposure to geopolitical risks to the supply chain.

“Secondary risks include power availability and power grid constraints that can affect the pace of AI implementation, in addition to inventory risks during architecture transitions and dependency on key people within the company,” they state.

Nvidia: Numbers and what to expect

Safra’s projections indicate that Nvidia should show significant growth in the coming years, with revenue advancing at a compound annual rate (CAGR) estimated at around 29.5% between fiscal years 2026 and 2031.

This performance should be driven mainly by the expansion of the data centerstoday the company’s main growth driver.

The operating model asset-light (i.e., focused on reducing physical assets to increase returns) of the company tends to sustain high levels of profitability, with an average gross margin of around 74%, margin EBIT (operating profit) close to 64% and net margin around 56% throughout the analyzed period.

Thus, the combination of accelerated growth and robust margins should result in cumulative operating cash generation of approximately US$1.67 trillion over the next five fiscal years.

With a strong cash generation capacity and low need for reinvestment, Nvidia is expected to return around 20% of its current market value to shareholders through share buybacks and dividend payments.