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NVIDIA Shares Rally Toward 52-Week High: Buy More or Lock in Gains?
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Key Takeaways
NVIDIA's Data Center revenues surged 75% year over year in fiscal Q4, driven by Blackwell GPUs.
NVDA expects fiscal Q1 revenues to jump 77% year over year to $78 billion on AI demand.
NVIDIA trades below the sector's forward P/E average despite strong AI-driven growth momentum.
NVIDIA Corporation (NVDA - Free Report) stands as a titan in the semiconductor industry, powered by solid financial health and strong demand for its graphics processing units (GPUs) to handle high-performance computing (HPC) and artificial intelligence (AI) workloads. The stock closed at $207.83 on May 6, shy of its recently hit 52-week high of $216.83 on April 27, reflecting strong investor confidence in NVIDIA’s prospects.
NVIDIA shares have soared 76.5% over the trailing 12 months, outperforming the broader Zacks Computer and Technology sector’s 53.8% surge. The impressive rally in the share price has placed NVIDIA among the top performers in the semiconductor space. Major semiconductor companies, including Marvell Technology, Inc. (MRVL - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and Broadcom, Inc. (AVGO - Free Report) , are also benefiting from the AI boom. Share prices of Marvell Technology, Applied Materials and Broadcom have soared 198%, 174.8% and 104.6%, respectively.
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, suggests that the stock will continue with its upward momentum.
NVIDIA One-Year Price Return Performance
Image Source: Zacks Investment Research
Data Center Demand Keeps Driving NVIDIA’s Growth Story
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 Financial Results Show Real Strength
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.
Low Valuation Justifies Buying NVDA Stock
Despite a robust rally, NVDA stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 23.64, which is significantly lower than the sector average of 25.01. This discount adds to the appeal for long-term investors.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with other major semiconductor players, NVIDIA has a lower P/E multiple than Advanced Micro Devices, Broadcom and NVIDIA. At present, Marvell Technology, Applied Materials and Broadcom trade at P/E multiples of 40.77, 33.98 and 28.93, respectively.
Given its exposure to AI growth, NVIDIA’s relative valuation strengthens the case for buying the stock.
Final Thoughts: 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.
View the Zacks #1 Rank List
Image: Bigstock
NVIDIA Shares Rally Toward 52-Week High: Buy More or Lock in Gains?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) stands as a titan in the semiconductor industry, powered by solid financial health and strong demand for its graphics processing units (GPUs) to handle high-performance computing (HPC) and artificial intelligence (AI) workloads. The stock closed at $207.83 on May 6, shy of its recently hit 52-week high of $216.83 on April 27, reflecting strong investor confidence in NVIDIA’s prospects.
NVIDIA shares have soared 76.5% over the trailing 12 months, outperforming the broader Zacks Computer and Technology sector’s 53.8% surge. The impressive rally in the share price has placed NVIDIA among the top performers in the semiconductor space. Major semiconductor companies, including Marvell Technology, Inc. (MRVL - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and Broadcom, Inc. (AVGO - Free Report) , are also benefiting from the AI boom. Share prices of Marvell Technology, Applied Materials and Broadcom have soared 198%, 174.8% and 104.6%, respectively.
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, suggests that the stock will continue with its upward momentum.
NVIDIA One-Year Price Return Performance
Image Source: Zacks Investment Research
Data Center Demand Keeps Driving NVIDIA’s Growth Story
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 Financial Results Show Real Strength
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.
Low Valuation Justifies Buying NVDA Stock
Despite a robust rally, NVDA stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 23.64, which is significantly lower than the sector average of 25.01. This discount adds to the appeal for long-term investors.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with other major semiconductor players, NVIDIA has a lower P/E multiple than Advanced Micro Devices, Broadcom and NVIDIA. At present, Marvell Technology, Applied Materials and Broadcom trade at P/E multiples of 40.77, 33.98 and 28.93, respectively.
Given its exposure to AI growth, NVIDIA’s relative valuation strengthens the case for buying the stock.
Final Thoughts: 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 carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.