A Closer Look at Nvidia

The Daily Breakdown takes a closer look at Nvidia, after the company delivered another record quarter but fell on the results.

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Deep Dive

A little more than a year ago, we published our first big Deep Dive on Nvidia. Admittedly, that report was a little wordier, but it did a thorough job dissecting the ins and outs of the business. With so much attention on Nvidia — the market’s only $5 trillion company — it seemed like the right time to revisit the name.

That said, many investors may be confused by Nvidia’s recent price action.

For starters, the company reported another record quarter this week, but it wasn’t enough to lift the stock, which fell after earnings for the fourth straight time. 

Second, Nvidia is up a solid 17.6% this year, but that’s only narrowly ahead of the Nasdaq 100’s (QQQ) 16.3% gain and actually trails the key semiconductor ETF (SMH), which is up 57.6% so far this year. The strength in SMH has been powered by enormous gains in stocks like Advanced Micro Devices, Micron, SanDisk, Intel, and others.

So what’s up with Nvidia?

Quietly, Nvidia is up 66.5% over the past year. But it may not feel that way as shares had been rangebound for several quarters. As the chart shows, the stock tends to move in phases: a big rally, followed by a sideways consolidation period as it digests those gains.

Future Growth Projections

Nvidia just reported its Q1 results for fiscal 2027, with revenue of $81.6 billion growing 85.2% year over year and beating estimates of $79.2 billion. Earnings of $1.87 per share grew 94.7% and topped EPS estimates of $1.77. According to Bloomberg, analysts project the following:

Earnings Growth: 83% in 2027, 39.7% in 2028
Revenue Growth: 76.3% in 2027, 38.5% in 2028

Analysts currently have a consensus price target of ~$300 on NVDA stock, implying about 36% upside to today’s stock price.

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Diving Deeper — Valuation

I included the stock’s one-year performance alongside the year-over-year growth in the business for a specific reason: Notice which figures were higher. In this case, earnings growth has outpaced the stock price. When fundamentals grow faster than the stock price, it can help keep the valuation in check.

This is a 10-year look at Nvidia’s forward P/E ratio. Notice how dips to roughly 20 times earnings have tended to act as a trough for the stock. That includes the late-2018 tech selloff, the 2024 tariff-fueled decline, and the most recent geopolitically charged pullback. Yet even after the stock’s recent run to record highs, shares still trade at less than 23 times forward estimates.

Risks 

Nvidia’s biggest shareholder risks are less about current demand and more about durability. Competition could eventually pressure pricing and margins, whether from AMD, custom AI chips, or hyperscalers building more of their own silicon. At the same time, Nvidia’s growth is heavily tied to massive AI infrastructure spending from companies like Meta, Alphabet, Microsoft, and Amazon; if that capex cycle slows, so could Nvidia’s revenue growth. Add in high expectations, export restrictions, supply-chain constraints, and geopolitical risk, and the stock may need continued execution to justify investor enthusiasm.

The Bottom Line

Nvidia remains one of the highest-quality businesses in the market, with exceptional margins, enormous demand, and a central role in the AI infrastructure buildout. It has become a true blue-chip of blue-chip stocks — and for now, the fundamentals continue to support that status.

That said, expectations are high and the margin for error is not unlimited. Competition, slower hyperscaler spending, export restrictions, or any stumble in execution could pressure the stock. But based on current growth expectations and a valuation that remains far from stretched, this does not yet look like the point where the fundamentals have lost control of the story.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.