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NVIDIA Falls 7% in a Month: Should You Still Hold NVDA Stock or Exit?
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Key Takeaways
NVDA Stock fell 6.6% in a month as broad chip weakness and AI spending concerns weighed on sentiment.
Data Center revenues jumped 92% YoY to $75.25B in Q1'27, making up 92% of NVIDIA's total sales.
NVIDIA generated $48.6B in first-quarter free cash flow and projects about $91B in Q2 revenues.
NVIDIA Corporation (NVDA - Free Report) shares have declined 6.6% over the past month, underperforming the broader Zacks Computer and Technology sector, which slipped 2.2% during the same period. At first glance, the decline may look worrying, but a closer look suggests the weakness is more about market sentiment than company-specific problems.
The sell-off has been widespread across the semiconductor industry. Shares of Marvell Technology, Inc. (MRVL - Free Report) , Broadcom Inc. (AVGO - Free Report) and STMicroelectronics N.V. (STM - Free Report) have witnessed a notable decline during the same time frame. Over the past month, shares of Marvell Technology, Broadcom and STMicroelectronics have plunged 15.1%, 9.1% and 8.9%, respectively. This indicates investors are reducing exposure to chip stocks rather than singling out NVIDIA.
The recent weakness stems from two key concerns. First, investors have become cautious about the enormous artificial intelligence (AI) spending by hyperscalers and whether these multibillion-dollar investments will generate attractive returns. Second, semiconductor stocks rallied sharply in early 2026, leaving valuations stretched in several names and prompting profit-taking by institutional investors.
However, while sentiment has weakened, NVIDIA's business fundamentals remain intact. The company's long-term growth story still appears compelling, which makes the stock worth holding on to.
NVIDIA One-Month Price Return Performance
Image Source: Zacks Investment Research
AI Spending Continues to Work in NVIDIA's Favor
NVIDIA remains the biggest beneficiary of the global AI infrastructure boom. Cloud providers, enterprises and governments continue investing heavily in AI data centers, and NVIDIA's graphics processing units (GPUs) remain the industry standard for training and deploying advanced AI models.
The company's Blackwell and Vera Rubin platforms are witnessing strong customer adoption, driven by growing demand for high-performance and energy-efficient AI computing. At the same time, NVIDIA is expanding beyond GPUs with networking products such as InfiniBand, Spectrum-X Ethernet and NVLink, allowing it to capture a larger share of AI infrastructure spending.
The numbers highlight this strength. During the first quarter of fiscal 2027, the Data Center segment generated $75.25 billion in revenues, accounting for 92% of total sales. Revenues from the segment surged 92% year over year and grew 21% sequentially, driven by the rapid ramp-up of Blackwell 300 systems and robust networking demand.
Another major advantage is NVIDIA's software ecosystem. Platforms like CUDA and its growing portfolio of AI software make it difficult for customers to switch to competing solutions. This creates a powerful competitive moat that extends well beyond hardware.
As AI adoption shifts from model training toward large-scale inference and enterprise deployment, NVIDIA appears well-positioned to benefit across multiple stages of the AI investment cycle.
NVIDIA's financial performance continues to justify investor confidence. First-quarter fiscal 2027 revenues climbed 85% year over year to $81.62 billion, while non-GAAP earnings per share jumped 140% to $1.87.
Management also expects the momentum to continue. For the second quarter of fiscal 2027, NVIDIA projects revenues of approximately $91 billion, representing nearly 95% year-over-year growth. The company also expects a non-GAAP gross margin of about 75%, up from 72.7% a year ago, reflecting healthy pricing power and operational efficiency.
Analysts remain optimistic as well. The Zacks Consensus Estimate points to continued revenue and earnings growth in both fiscal 2027 and fiscal 2028, suggesting that demand for NVIDIA's AI products remains far from slowing.
Image Source: Zacks Investment Research
The company's cash generation is equally impressive. During the first quarter, NVIDIA generated $50.3 billion in operating cash flow and $48.6 billion in free cash flow. It ended the quarter with $80.6 billion in cash, cash equivalents and marketable securities, up from $62.6 billion in the previous quarter.
This enormous financial flexibility allows NVIDIA to invest aggressively in research and development, expand production capacity and reward shareholders. During the quarter, the company repurchased $19.3 billion worth of shares and paid $243 million in dividends.
NVDA Stock’s Valuation Still Looks Attractive
Despite becoming one of the world's most valuable companies, NVIDIA's valuation is still very attractive.
The stock currently trades at a forward 12-month price-to-earnings (P/E) multiple of 18.87, below the Zacks Computer & Technology sector average of 22.73.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
NVIDIA also trades at a lower multiple than several semiconductor peers such as Marvell Technology, STMicroelectronics and Broadcom. Marvell carries a forward P/E of 49.59, STMicroelectronics trades at 33.49, and Broadcom at 21.50.
That discount is noteworthy because NVIDIA continues to deliver faster growth, stronger profitability and a more dominant competitive position than many of its peers. If the company maintains its current execution, the valuation still leaves room for long-term upside.
Should Investors Hold NVIDIA Stock?
The recent pullback appears to be driven more by broad semiconductor weakness and concerns over AI spending than by any deterioration in NVIDIA's business. The company continues to dominate the AI infrastructure market, deliver exceptional financial results and generate massive cash flows, while its valuation remains reasonable relative to its growth outlook.
The investment thesis remains intact for long-term investors. NVIDIA's leadership in AI hardware, networking and software gives it multiple avenues for sustained growth. Rather than chasing the stock after every rally or exiting during short-term weakness, the prudent approach is to hold NVIDIA stock for now and let its strong fundamentals play out over time.
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NVIDIA Falls 7% in a Month: Should You Still Hold NVDA Stock or Exit?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) shares have declined 6.6% over the past month, underperforming the broader Zacks Computer and Technology sector, which slipped 2.2% during the same period. At first glance, the decline may look worrying, but a closer look suggests the weakness is more about market sentiment than company-specific problems.
The sell-off has been widespread across the semiconductor industry. Shares of Marvell Technology, Inc. (MRVL - Free Report) , Broadcom Inc. (AVGO - Free Report) and STMicroelectronics N.V. (STM - Free Report) have witnessed a notable decline during the same time frame. Over the past month, shares of Marvell Technology, Broadcom and STMicroelectronics have plunged 15.1%, 9.1% and 8.9%, respectively. This indicates investors are reducing exposure to chip stocks rather than singling out NVIDIA.
The recent weakness stems from two key concerns. First, investors have become cautious about the enormous artificial intelligence (AI) spending by hyperscalers and whether these multibillion-dollar investments will generate attractive returns. Second, semiconductor stocks rallied sharply in early 2026, leaving valuations stretched in several names and prompting profit-taking by institutional investors.
However, while sentiment has weakened, NVIDIA's business fundamentals remain intact. The company's long-term growth story still appears compelling, which makes the stock worth holding on to.
NVIDIA One-Month Price Return Performance
Image Source: Zacks Investment Research
AI Spending Continues to Work in NVIDIA's Favor
NVIDIA remains the biggest beneficiary of the global AI infrastructure boom. Cloud providers, enterprises and governments continue investing heavily in AI data centers, and NVIDIA's graphics processing units (GPUs) remain the industry standard for training and deploying advanced AI models.
The company's Blackwell and Vera Rubin platforms are witnessing strong customer adoption, driven by growing demand for high-performance and energy-efficient AI computing. At the same time, NVIDIA is expanding beyond GPUs with networking products such as InfiniBand, Spectrum-X Ethernet and NVLink, allowing it to capture a larger share of AI infrastructure spending.
The numbers highlight this strength. During the first quarter of fiscal 2027, the Data Center segment generated $75.25 billion in revenues, accounting for 92% of total sales. Revenues from the segment surged 92% year over year and grew 21% sequentially, driven by the rapid ramp-up of Blackwell 300 systems and robust networking demand.
Another major advantage is NVIDIA's software ecosystem. Platforms like CUDA and its growing portfolio of AI software make it difficult for customers to switch to competing solutions. This creates a powerful competitive moat that extends well beyond hardware.
As AI adoption shifts from model training toward large-scale inference and enterprise deployment, NVIDIA appears well-positioned to benefit across multiple stages of the AI investment cycle.
NVIDIA’s Financial Performance Remains Exceptional
NVIDIA's financial performance continues to justify investor confidence. First-quarter fiscal 2027 revenues climbed 85% year over year to $81.62 billion, while non-GAAP earnings per share jumped 140% to $1.87.
Management also expects the momentum to continue. For the second quarter of fiscal 2027, NVIDIA projects revenues of approximately $91 billion, representing nearly 95% year-over-year growth. The company also expects a non-GAAP gross margin of about 75%, up from 72.7% a year ago, reflecting healthy pricing power and operational efficiency.
Analysts remain optimistic as well. The Zacks Consensus Estimate points to continued revenue and earnings growth in both fiscal 2027 and fiscal 2028, suggesting that demand for NVIDIA's AI products remains far from slowing.
Image Source: Zacks Investment Research
The company's cash generation is equally impressive. During the first quarter, NVIDIA generated $50.3 billion in operating cash flow and $48.6 billion in free cash flow. It ended the quarter with $80.6 billion in cash, cash equivalents and marketable securities, up from $62.6 billion in the previous quarter.
This enormous financial flexibility allows NVIDIA to invest aggressively in research and development, expand production capacity and reward shareholders. During the quarter, the company repurchased $19.3 billion worth of shares and paid $243 million in dividends.
NVDA Stock’s Valuation Still Looks Attractive
Despite becoming one of the world's most valuable companies, NVIDIA's valuation is still very attractive.
The stock currently trades at a forward 12-month price-to-earnings (P/E) multiple of 18.87, below the Zacks Computer & Technology sector average of 22.73.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
NVIDIA also trades at a lower multiple than several semiconductor peers such as Marvell Technology, STMicroelectronics and Broadcom. Marvell carries a forward P/E of 49.59, STMicroelectronics trades at 33.49, and Broadcom at 21.50.
That discount is noteworthy because NVIDIA continues to deliver faster growth, stronger profitability and a more dominant competitive position than many of its peers. If the company maintains its current execution, the valuation still leaves room for long-term upside.
Should Investors Hold NVIDIA Stock?
The recent pullback appears to be driven more by broad semiconductor weakness and concerns over AI spending than by any deterioration in NVIDIA's business. The company continues to dominate the AI infrastructure market, deliver exceptional financial results and generate massive cash flows, while its valuation remains reasonable relative to its growth outlook.
The investment thesis remains intact for long-term investors. NVIDIA's leadership in AI hardware, networking and software gives it multiple avenues for sustained growth. Rather than chasing the stock after every rally or exiting during short-term weakness, the prudent approach is to hold NVIDIA stock for now and let its strong fundamentals play out over time.
NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.