Rolls-Royce (LSE:RR) shares reflect one of the greatest stock market recoveries in recent history. From some analysts suggesting it was nearing bankruptcy to now teetering on a £100bn-valuation, it has come a long way in three years.
But where will it go next? That’s the question all investors should be asking. Because the company offers a very different proposition than it did a few years ago.
So, I asked ChatGPT where it thought Rolls-Royce shares would be in one year. Its answer drew the opinions shared by other analysts. Perhaps not the deep dive I was looking for, but a good start nonetheless.
Here’s what it said:
Here’s a plausible range one year out (i.e. around mid-2026):
- Bear case: If growth disappoints, or macro pressures hit hard, the share could regress toward the lower end of forecasts — e.g. ~ 800–900p.
- Base / consensus case: Many analysts cluster around 1,100 p to 1,300p — which implies modest to strong upside from today.
- Bull case: If the turnaround continues aggressively, investor sentiment is buoyed, and new contracts/technological successes arrive, the share could hit 1,400p+ or higher.
So, my best estimate (blending upside and risk) is that Rolls-Royce shares could be around 1,150p to 1,250p in one year, assuming no major shocks and continued execution.
My take
ChatGPT’s conclusion isn’t far away from my own thoughts. However, it’s clearly leaning heavily on the thoughts on other analysts.
One thing is clear, and that’s Rolls-Royce’s operational momentum and momentum of the shares. And that’s something that could continue to drive the stock up over the next year.
That means another few strong earnings reports and continued appetite from shareholders.
However, there probably isn’t much room to run on the valuation front. Based on the data, Rolls-Royce is trading at the top end of what we would expect from a company in its position.
The stock currently trades with a forward price-to-earnings (P/E) ratio of 48. That’s very hefty even for a quality company with a hugely impressive economic moat.
However, the current growth forecast — 19.4% annually over the next three-five years — brings us to a price-to-earnings-to-growth (PEG) ratio of 2.5.
While we must realise that investors are willing to pay a premium for companies with strong margins, long-term growth potential, and good economic moats, we must also accept that this PEG ratio is to the higher end of what would normally be considered good value.
This suggests to me that investors aren’t going to buying this stock because of the data they see today. It’ll be momentum trading, and it’ll be because earnings outpace expectations.
The bottom line
Rolls-Royce was one of the most clearly undervalued stocks on the FTSE 100 in recent years. However, that’s no longer the case.
I agree with ChatGPT in that the stock could sit higher one year from now. But that won’t be because of the current valuation proposition.
It’s still worth considering, but investors should proceed with some caution.
