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NVIDIA's Valuation Looks Attractive: Is it Time to Buy the Stock?
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Key Takeaways
NVIDIA trades at a forward P/E of 21.66, below the semiconductor industry average of 23.57.
NVDA's Data Center revenues hit $62.31B in Q4, up 75% year over year on strong AI demand.
NVIDIA expects Q1 fiscal 2027 revenues to rise 77% YoY to $78B, signaling continued momentum.
NVIDIA Corporation’s (NVDA - Free Report) current valuation suggests the stock is trading at a discount relative to the industry average. NVDA stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of 21.66, which is significantly lower than the Zacks Semiconductor – General industry average of 23.57.
NVIDIA has a lower P/E multiple than major semiconductor players, including Intel Corporation (INTC - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) and Broadcom Inc. (AVGO - Free Report) . Currently, Intel, Advanced Micro Devices and Broadcom trade at P/E multiples of 87.21, 29.49 and 24.37, respectively.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
What makes NVDA a more lucrative bargain at the moment is its impressive share price performance over the past year. NVIDIA shares have soared 59% over the trailing 12 months, outperforming the industry’s 54.6% surge. The robust outperformance reflects investors’ optimism about the company’s near-term prospects. NVIDIA has been a key beneficiary of the artificial intelligence (AI) boom, which has driven strong demand for its graphics processing units (GPUs) and computing solutions.
The impressive rally in the share price has placed NVIDIA among the top performers in the semiconductor space. Major semiconductor companies, including Intel, Advanced Micro Devices and Broadcom, are also benefiting from the AI boom. Share prices of Intel, Advanced Micro Devices and Broadcom have soared 172.4%, 138.2% and 89.2%, respectively.
NVIDIA One-Year Share Price Return Performance
Image Source: Zacks Investment Research
As the demand for hardware supporting AI and high-performance computing is likely to remain strong, NVDA is well-positioned to benefit. This strong fundamental growth driver, along with an attractive valuation, makes the stock a better investment option right now.
AI Boom Keeps Aiding NVIDIA’s Data Center Business
NVIDIA’s most powerful growth engine continues to be its Data Center business. In the fourth quarter of fiscal 2026, the segment generated $62.31 billion in revenues, representing 91.5% of total sales. This marked a staggering 75% year-over-year increase and 22% 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 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 Resilient Financial Performance
Despite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, NVIDIA’s financials remain rock solid. In the fourth quarter of fiscal 2026, revenues jumped 73% from the year-ago quarter, while non-GAAP earnings per share rose 82%.
NVIDIA’s outlook for the first quarter of fiscal 2027 remains upbeat. The company expects first-quarter revenues to increase 77% year over year to $78 billion, reflecting continued momentum in AI-driven demand. The non-GAAP gross margin is expected to be strong at 75%, indicating a 370-basis-point improvement from the year-ago quarter’s 71.3% (excluding H20 charge).
The Zacks Consensus Estimate for fiscal 2027 and 2028 suggests 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 $36.19 billion in the fiscal fourth quarter and $102.72 billion in fiscal 2026. The company ended the fiscal fourth quarter with $62.6 billion in cash, cash equivalents and marketable securities, up from $60.6 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 fourth quarter, the company returned $243 million to its shareholders through dividend payouts and repurchased stocks worth $3.82 billion. In fiscal 2026, NVIDIA paid out $974 million in dividends and bought back shares worth $40.09 billion.
Conclusion: Buy NVDA Stock for Now
NVIDIA’s dominant position in AI, coupled with its financial strength, broad market applications and attractive valuation, makes it a compelling buy. The company’s strong financial results, impressive outlook and extensive cash reserves create a solid foundation for continued growth.
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NVIDIA's Valuation Looks Attractive: Is it Time to Buy the Stock?
Key Takeaways
NVIDIA Corporation’s (NVDA - Free Report) current valuation suggests the stock is trading at a discount relative to the industry average. NVDA stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of 21.66, which is significantly lower than the Zacks Semiconductor – General industry average of 23.57.
NVIDIA has a lower P/E multiple than major semiconductor players, including Intel Corporation (INTC - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) and Broadcom Inc. (AVGO - Free Report) . Currently, Intel, Advanced Micro Devices and Broadcom trade at P/E multiples of 87.21, 29.49 and 24.37, respectively.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
What makes NVDA a more lucrative bargain at the moment is its impressive share price performance over the past year. NVIDIA shares have soared 59% over the trailing 12 months, outperforming the industry’s 54.6% surge. The robust outperformance reflects investors’ optimism about the company’s near-term prospects. NVIDIA has been a key beneficiary of the artificial intelligence (AI) boom, which has driven strong demand for its graphics processing units (GPUs) and computing solutions.
The impressive rally in the share price has placed NVIDIA among the top performers in the semiconductor space. Major semiconductor companies, including Intel, Advanced Micro Devices and Broadcom, are also benefiting from the AI boom. Share prices of Intel, Advanced Micro Devices and Broadcom have soared 172.4%, 138.2% and 89.2%, respectively.
NVIDIA One-Year Share Price Return Performance
Image Source: Zacks Investment Research
As the demand for hardware supporting AI and high-performance computing is likely to remain strong, NVDA is well-positioned to benefit. This strong fundamental growth driver, along with an attractive valuation, makes the stock a better investment option right now.
AI Boom Keeps Aiding NVIDIA’s Data Center Business
NVIDIA’s most powerful growth engine continues to be its Data Center business. In the fourth quarter of fiscal 2026, the segment generated $62.31 billion in revenues, representing 91.5% of total sales. This marked a staggering 75% year-over-year increase and 22% 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 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 Resilient Financial Performance
Despite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, NVIDIA’s financials remain rock solid. In the fourth quarter of fiscal 2026, revenues jumped 73% from the year-ago quarter, while non-GAAP earnings per share rose 82%.
NVIDIA’s outlook for the first quarter of fiscal 2027 remains upbeat. The company expects first-quarter revenues to increase 77% year over year to $78 billion, reflecting continued momentum in AI-driven demand. The non-GAAP gross margin is expected to be strong at 75%, indicating a 370-basis-point improvement from the year-ago quarter’s 71.3% (excluding H20 charge).
The Zacks Consensus Estimate for fiscal 2027 and 2028 suggests 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 $36.19 billion in the fiscal fourth quarter and $102.72 billion in fiscal 2026. The company ended the fiscal fourth quarter with $62.6 billion in cash, cash equivalents and marketable securities, up from $60.6 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 fourth quarter, the company returned $243 million to its shareholders through dividend payouts and repurchased stocks worth $3.82 billion. In fiscal 2026, NVIDIA paid out $974 million in dividends and bought back shares worth $40.09 billion.
Conclusion: Buy NVDA Stock for Now
NVIDIA’s dominant position in AI, coupled with its financial strength, broad market applications and attractive valuation, makes it a compelling buy. The company’s strong financial results, impressive outlook and extensive cash reserves create a solid foundation for continued growth.
Currently, NVIDIA sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.