Wolfe Research has increased its price target for Nvidia to $275, up from $250. This adjustment reflects expectations that rack-scale systems, higher average selling prices, and sustained margins will propel earnings beyond current projections. The firm anticipates strong demand for Nvidia's data center GPUs, particularly as the company shifts towards more profitable rack-scale solutions.

Nvidia's strategy centers on selling completed boards to cloud service providers. These boards, representing about 75% of the final rack price, are manufactured and assembled by TSM and Foxconn. Analyst estimates suggest Blackwell rack shipments will reach roughly 1,000 units per week by the end of 2025, maintaining this pace through 2026, and a similar run rate expected for Rubin.

Wolfe forecasts approximately 55,000 Blackwell racks and 20,000 Rubin racks in 2026. This is expected to drive data center revenue above $450 billion by 2027, driven by higher volumes and roughly 20% higher ASPs. With the move to Rubin Ultra, the firm anticipates rack pricing around $10 million, reflecting a doubling of GPUs per rack.

The firm anticipates Nvidia will sustain pricing power and gross margins of around 75%. This is driven by continued performance gains and limited competitive pressure. Wolfe models a bull case scenario of $500 billion and $12 in earnings per share for 2027. This positive outlook suggests confidence in Nvidia's future growth and market dominance in the high-performance computing space.