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NVIDIA Hits $5T Market Cap Mark: Can the Stock Sustain Momentum?
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Key Takeaways
NVIDIA has reached a $5T market cap, the first public firm to achieve that valuation milestone.
Data Center revenues surged 56% year over year, driven by demand for Blackwell and Hopper GPUs.
Strong cash flow and upbeat guidance reinforce NVIDIA's leadership in AI and high-performance computing.
NVIDIA Corporation (NVDA - Free Report) surpassed the $5 trillion market capitalization last week as it continues to benefit from the robust demand for its next-generation chips for artificial intelligence (AI) models and high-performance computing. The AI chipmaker attained this milestone on Oct. 29 and became the first ever publicly traded company to hit the $5 trillion market cap.
NVIDIA has witnessed a remarkable run, showcasing a staggering 50.8% surge in its stock price this year so far. The stock has outperformed the Zacks Computer and Technology sector’s year-to-date (YTD) gain of 29.6%.
It has even outpaced major semiconductor companies, including QUALCOMM (QCOM - Free Report) , Texas Instruments (TXN - Free Report) and Marvell Technology (MRVL - Free Report) . QUALCOMM stock has gained 17.8% YTD, while shares of Texas Instruments and Marvell Technology have fallen 13.9% and 15.1%, respectively.
NVIDIA YTD Price Return Performance
Image Source: Zacks Investment Research
This outperformance shows investors are becoming increasingly confident in NVIDIA’s long-term prospects, even in a volatile market shaped by trade conflicts and geopolitical risks. We believe that NVDA stock will sustain this upward trajectory at least in the near term, making it worth buying for now.
AI Boom Keeps Boosting NVIDIA’s Data Center Business
NVIDIA’s most powerful growth engine continues to be its Data Center business. In the second quarter of fiscal 2026, the segment generated $41.1 billion in revenues, representing 87.9% of total sales. This marked a staggering 56% year-over-year increase and 5% sequential growth.
The robust performance was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications.
The demand for NVIDIA’s Hopper 200 and Blackwell GPU computing platforms has been a key catalyst as cloud providers and enterprises scale their AI infrastructure. Large cloud service providers contributed to the majority of Data Center revenues, indicating continued hyperscale investment in AI-driven computing.
With AI adoption accelerating across industries, NVIDIA's stronghold in data centers makes it a critical beneficiary of this trend. The company’s leadership in AI chip development positions it well for sustained revenue growth in this segment.
NVIDIA’s Strong Financial Performance
Despite ongoing macroeconomic challenges, geopolitical issues and trade and tariff wars, NVIDIA’s financials remain rock solid. In the second quarter of fiscal 2026, revenues jumped 56% from the year-ago quarter, while non-GAAP earnings per share rose 54%.
The company reported a non-GAAP gross margin of 61%, maintaining profitability despite rising operational expenses. Non-GAAP operating income jumped 51% year over year to $30.17 billion, reflecting the company’s ability to convert strong revenue growth into bottom-line gains.
NVIDIA’s outlook for the third quarter of fiscal 2026 remains upbeat. The company expects third-quarter revenues to increase 55% year over year to $54 billion, reflecting continued momentum in AI-driven demand. The gross margin is expected to be strong at 73.5% despite increasing costs associated with ramping up Blackwell production.
The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates continued growth momentum for the company’s top and bottom lines.
Image Source: Zacks Investment Research
NVIDIA’s cash flow generation also remains robust. It generated a free cash flow of $13.45 billion in the fiscal second quarter and $39.58 billion in the first half of fiscal 2026. The company ended the fiscal second quarter with $56.79 billion in cash, cash equivalents and marketable securities, up from $53.7 billion in the previous quarter.
This strong liquidity position enables NVIDIA to reinvest in research and development, expand manufacturing capabilities and return capital to shareholders. In the fiscal second quarter, the company returned $244 million to its shareholders through dividend payouts and repurchased stocks worth $9.72 billion. In the first half of fiscal 2026, NVIDIA paid out $488 million in dividends and bought back shares worth $23.82 billion.
NVDA’s Strong Fundamentals Support Premium Valuation
NVIDIA stock isn’t cheap. It trades at a forward 12-month price-to-earnings (P/E) of 34.90X compared with the sector average of 30.16X. However, that valuation looks more reasonable when viewed through the lens of NVDA’s market position and forward earnings growth projections.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared to other semiconductor peers, NVIDIA has a higher P/E multiple than QUALCOMM, Texas Instruments and Marvell Technology. Currently, QUALCOMM, Texas Instruments and Marvell Technology trade at P/E of 15.15X, 26.70X and 29.22X, respectively. NVDA’s higher multiple not only reflects its technology leadership but also the longer visibility of its growth cycle.
Final Thoughts: Buy NVDA Stock for Now
NVIDIA’s strong fundamentals, dominant position in AI and impressive growth outlook make a compelling case for staying invested. While valuation is on the higher side, the company’s momentum, both operationally and financially, supports buying the stock.
Image: Bigstock
NVIDIA Hits $5T Market Cap Mark: Can the Stock Sustain Momentum?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) surpassed the $5 trillion market capitalization last week as it continues to benefit from the robust demand for its next-generation chips for artificial intelligence (AI) models and high-performance computing. The AI chipmaker attained this milestone on Oct. 29 and became the first ever publicly traded company to hit the $5 trillion market cap.
NVIDIA has witnessed a remarkable run, showcasing a staggering 50.8% surge in its stock price this year so far. The stock has outperformed the Zacks Computer and Technology sector’s year-to-date (YTD) gain of 29.6%.
It has even outpaced major semiconductor companies, including QUALCOMM (QCOM - Free Report) , Texas Instruments (TXN - Free Report) and Marvell Technology (MRVL - Free Report) . QUALCOMM stock has gained 17.8% YTD, while shares of Texas Instruments and Marvell Technology have fallen 13.9% and 15.1%, respectively.
NVIDIA YTD Price Return Performance
Image Source: Zacks Investment Research
This outperformance shows investors are becoming increasingly confident in NVIDIA’s long-term prospects, even in a volatile market shaped by trade conflicts and geopolitical risks. We believe that NVDA stock will sustain this upward trajectory at least in the near term, making it worth buying for now.
AI Boom Keeps Boosting NVIDIA’s Data Center Business
NVIDIA’s most powerful growth engine continues to be its Data Center business. In the second quarter of fiscal 2026, the segment generated $41.1 billion in revenues, representing 87.9% of total sales. This marked a staggering 56% year-over-year increase and 5% sequential growth.
The robust performance was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications.
The demand for NVIDIA’s Hopper 200 and Blackwell GPU computing platforms has been a key catalyst as cloud providers and enterprises scale their AI infrastructure. Large cloud service providers contributed to the majority of Data Center revenues, indicating continued hyperscale investment in AI-driven computing.
With AI adoption accelerating across industries, NVIDIA's stronghold in data centers makes it a critical beneficiary of this trend. The company’s leadership in AI chip development positions it well for sustained revenue growth in this segment.
NVIDIA’s Strong Financial Performance
Despite ongoing macroeconomic challenges, geopolitical issues and trade and tariff wars, NVIDIA’s financials remain rock solid. In the second quarter of fiscal 2026, revenues jumped 56% from the year-ago quarter, while non-GAAP earnings per share rose 54%.
The company reported a non-GAAP gross margin of 61%, maintaining profitability despite rising operational expenses. Non-GAAP operating income jumped 51% year over year to $30.17 billion, reflecting the company’s ability to convert strong revenue growth into bottom-line gains.
NVIDIA’s outlook for the third quarter of fiscal 2026 remains upbeat. The company expects third-quarter revenues to increase 55% year over year to $54 billion, reflecting continued momentum in AI-driven demand. The gross margin is expected to be strong at 73.5% despite increasing costs associated with ramping up Blackwell production.
The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates continued growth momentum for the company’s top and bottom lines.
Image Source: Zacks Investment Research
NVIDIA’s cash flow generation also remains robust. It generated a free cash flow of $13.45 billion in the fiscal second quarter and $39.58 billion in the first half of fiscal 2026. The company ended the fiscal second quarter with $56.79 billion in cash, cash equivalents and marketable securities, up from $53.7 billion in the previous quarter.
This strong liquidity position enables NVIDIA to reinvest in research and development, expand manufacturing capabilities and return capital to shareholders. In the fiscal second quarter, the company returned $244 million to its shareholders through dividend payouts and repurchased stocks worth $9.72 billion. In the first half of fiscal 2026, NVIDIA paid out $488 million in dividends and bought back shares worth $23.82 billion.
NVDA’s Strong Fundamentals Support Premium Valuation
NVIDIA stock isn’t cheap. It trades at a forward 12-month price-to-earnings (P/E) of 34.90X compared with the sector average of 30.16X. However, that valuation looks more reasonable when viewed through the lens of NVDA’s market position and forward earnings growth projections.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared to other semiconductor peers, NVIDIA has a higher P/E multiple than QUALCOMM, Texas Instruments and Marvell Technology. Currently, QUALCOMM, Texas Instruments and Marvell Technology trade at P/E of 15.15X, 26.70X and 29.22X, respectively. NVDA’s higher multiple not only reflects its technology leadership but also the longer visibility of its growth cycle.
Final Thoughts: Buy NVDA Stock for Now
NVIDIA’s strong fundamentals, dominant position in AI and impressive growth outlook make a compelling case for staying invested. While valuation is on the higher side, the company’s momentum, both operationally and financially, supports buying the stock.
NVIDIA carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.