For three years now, artificial intelligence (AI) stocks like Nvidia (NASDAQ: NVDA) have been on the up. With AI technology going mainstream thanks to apps like ChatGPT and Gemini, the theme has dominated the market.

Can these stocks perform again in 2026? I think so. Below, I’ll explain why. I’ll also provide my target share price for Nvidia.

AI’s the real deal

Many investors today think AI’s overhyped. I don’t share their scepticism though. I believe we are in the early stages of a multi-year AI-powered tech revolution. In my view, AI’s going to disrupt every industry in the years ahead.

In 2026, I think we’re likely to see a lot of exciting developments on the AI front (that separate hype from reality) including:

• AI agents: I expect more companies to start using agentic AI solutions from the likes of Salesforce and ServiceNow (one recent survey found that 69% of global business leaders expect agentic AI to transform their operations in the year ahead). Early adopters could start to demonstrate productivity gains and material cost savings.

• New AI chips: Nvidia will be launching its next chip, Vera Rubin, in 2026. This is set to deliver a massive jump in performance.

• Physical AI: 2026 could be a blockbuster year for physical AI. Think self-driving cars and humanoid robots.

• Sovereign AI investments: In 2025, several countries invested heavily in AI infrastructure. I expect to see more sovereign investments in 2026.

Put all this together and the outlook for AI stocks is favourable, in my view. I’ll point out that I don’t expect every stock in this area of the market to do well – there will be some laggards. I also expect to see some volatility at times. Yet taking a 12-month view, I’m optimistic about the overall prospects for this area of technology.

How high can Nvidia go in 2026?

As for my price target for Nvidia in 2026, it’s $250. I realise that’s a decent jump (about +30%) from the current share price but here’s my logic.

Demand for Nvidia’s chips is going to remain very high, in my view. Recently, the company has said it has about $500bn in revenue visibility from its Blackwell and Vera Rubin chips from the start of 2025 through the end of calendar year 2026.

Now, at present, analysts expect the company to generate earnings per share of $7.69 for FY2027 (the financial year starting 1 February 2026). Let’s assume this forecast’s going to be accurate.

And then let’s assume that earnings growth the following year is going to be 20%. That gives us an earnings forecast of $9.23 per share for FY2028.

Apply a forward-looking earnings multiple to that and we get:

• $231 at a multiple of 25
• $249 at a multiple of 27
• $277 at a multiple of 30

I’ll go with the middle multiple as I think that’s very fair. It’s worth noting that this price target’s very close to the average analyst price target right now ($253).

Of course, I’m making a lot of assumptions here. And there are plenty of factors that could derail my bullish investment thesis, including a slowdown in AI spending and increased competition in the chip space.

I continue to believe that Nvidia has significant growth potential though. In my view, investors should consider buying on pullbacks.