RBC Capital has reiterated its Outperform rating and $250 price target on Nvidia Corporation [NASDAQ: NVDA], reaffirming its bullish stance on the world’s dominant AI chip designer ahead of the company’s fiscal first-quarter 2027 earnings report scheduled for May 20.

The $250 target sits above the current analyst consensus and implies meaningful upside from recent trading levels, with the InvestingPro analyst target range for NVDA spanning from $140 to $380.

RBC expects Nvidia’s upcoming results and second-quarter outlook to show a 3% to 5% beat and raise, consistent with the pattern the company has delivered across each of the past three quarters, as demand for AI compute infrastructure continues to significantly outpace available supply.

The firm’s analysis points to AI compute demand as the primary driver, with visibility on order flow and infrastructure commitments now extending well into calendar year 2027, a longer forward view than analysts had been accustomed to modelling in prior cycles.

Component shortages and constraints around power availability and physical infrastructure remain the key near-term challenges limiting how quickly Nvidia can convert demand into revenue, though RBC views the company as relatively better positioned than peers from a supply standpoint given the strength of its manufacturing relationships with TSMC.

Gross margin remains an area of close attention for the market, and RBC expects management to maintain a mid-70% gross margin target in its guidance despite the ongoing surge in high-bandwidth memory prices, which have added cost pressure across the AI chip industry broadly.

The bank cited improving AI monetisation trends, continued scaling of large language models, and an unsettled leadership battle among AI model developers as structural factors that support sustained demand for Nvidia’s products through the current cycle.

RBC also characterised Nvidia’s balance sheet strength as a structural competitive advantage, providing the company with the flexibility to invest aggressively in next-generation architectures while absorbing supply chain disruptions that create more difficulty for smaller competitors.

On valuation, the firm noted that Nvidia trades at approximately 21 times its calendar year 2027 estimated earnings per share, representing a discount of approximately 30% to the broader semiconductor peer group and 15% to the Magnificent Seven basket, making the multiple appear relatively modest given Nvidia’s dominant position and growth trajectory.

Nvidia also recently announced a strategic collaboration with Corning for three advanced optical manufacturing facilities in North Carolina and Texas, with both companies projecting the partnership will create at least 3,000 jobs and increase Corning’s US optical manufacturing capacity tenfold.

The company additionally disclosed a strategic collaboration with Chery’s EXEED brand to develop AI-driven vehicles and robots using the Nvidia DRIVE Hyperion platform, expanding its addressable market into automotive AI ahead of what management has described as an autonomous vehicle inflection point.