Wall Street’s year-end momentum may be building as the S&P 500 (NYSEARCA:SPY) hovers near record highs, marking its 38th all-time close in 2025. Many analysts anticipate a Santa Claus rally could push major indexes further into early 2026. Among tech stocks, Nvidia stock may play a pivotal role in driving sector gains in 2026.
After trading roughly 20% below its all-time highs, Nvidia (NASDAQ:NVDA) has surged in the last four sessions. Investor concerns over the sustainability of AI spending and circular economy issues have eased as the company shows signs of maintaining its AI dominance.
According to MarketWatch, Mark Newton, head of technical strategy at Fundstrat, believes Nvidia’s breakout above the October downtrend is a bullish signal. He expects NVDA stock to outperform in the coming weeks, coinciding with the traditional Santa Claus rally, which runs from December 24 through January 5.
Why Investors Are Bullish on Nvidia Stock for 2026
With a market capitalization of $4.6 trillion, Nvidia has delivered extraordinary returns to shareholders, exceeding 23,000% over the past decade. In 2025, the company continues to strengthen its AI infrastructure leadership beyond traditional data center products.
Nvidia’s CFO Colette Kress recently highlighted a potential $500 billion backlog for Blackwell and Vera Rubin chips. Kress emphasized that data center infrastructure spending could surpass $3 trillion by 2030, with GPU-accelerated systems capturing roughly 50% of that expenditure.
Despite growing competition from AMD (NASDAQ:AMD), Nvidia’s AI moat remains robust. Most shipments represent net-new installations rather than replacements, and Ampere-generation GPUs still command premium pricing from cloud providers. Hyperscalers, who make up 50% of quarterly revenue, continue to drive demand and indirectly support AI startups.
Additionally, a new OpenAI framework agreement for 10 gigawatts of computing capacity represents direct NVDA sales, separate from existing backlogs.
Nvidia Expands Into Industrial AI With Synopsys
Nvidia’s partnership with Synopsys (NASDAQ:SNPS) marks a strategic expansion into industrial AI and engineering design. CEO Jensen Huang revealed a $2 billion investment to integrate Nvidia GPUs, physical AI, and the Omniverse digital twin platform into Synopsys engineering tools.
The collaboration targets the global engineering and R&D budgets across industries designing physical products. It mirrors the transformation seen in scientific computing, where GPU systems grew from 10% of supercomputing infrastructure in 2016 to 90% today. Core engineering workloads, such as computational lithography and circuit simulation, could see performance improvements of 10x to over 1,000x, cutting multi-week simulations to hours.
Huang emphasized that this partnership unlocks a market worth hundreds of billions of dollars annually, extending Nvidia’s reach well beyond semiconductors to all global manufacturing sectors. With Vera Rubin chips slated for a second-half 2026 launch and gross margins steady around 70%, Nvidia executes on multiple fronts while maintaining financial discipline.
Nvidia Stock 2026 Price Targets
Analysts remain bullish on Nvidia stock. Revenue projections see Nvidia growing from $130.5 billion in fiscal 2025 to $481 billion in fiscal 2030, while adjusted earnings per share could climb from $2.99 to $12.21.
NVDA trades at 27x forward earnings, below its 10-year average of 37x, signaling potential value for long-term investors. Of 48 analysts covering NVDA, 44 rate it a “Strong Buy,” two a “Moderate Buy,” one a “Hold,” and one a “Strong Sell.” The average price target stands at $256, compared with a current trading price of $187.
Should You Buy Nvidia Stock Now?
For investors eyeing a year-end rally, Nvidia stock appears positioned for strong upside. Its AI infrastructure leadership, strategic industrial partnerships, and robust revenue growth outlook provide compelling reasons to consider entering the stock ahead of the Santa Claus rally.
While no investment is without risk, NVDA’s recent momentum, expanding AI applications, and long-term growth trajectory suggest that buying shares now could align with both short-term and multi-year gains.
Featured Image – Megapixl
Author Stephanie Bédard-Châteauneuf 
