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Should You Buy NVIDIA Stock After Its 11% Rally in a Month?
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Key Takeaways
NVIDIA shares gained 11.2% in a month, outperforming the broader technology sector and chip peers.
NVIDIA's fiscal Q1 revenues surged 85% to $81.62 billion, while non-GAAP EPS jumped 140% to $1.87.
NVDA trades at 20.17 times forward earnings, below the technology sector average of 21.50
NVIDIA Corporation (NVDA - Free Report) shares have gained 11.2% over the past month, comfortably beating the broader Zacks Computer and Technology sector, which advanced only 1.6%.
The stock has also outperformed major semiconductor peers such as Intel Corporation (INTC - Free Report) , Marvell Technology, Inc. (MRVL - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) , all of which posted declines during the same period. Over the past month, shares of Intel, Marvell Technology and Advanced Micro Devices have plunged 9.4%, 8.9% and 5.4%, respectively.
The recent rally reflects growing investor confidence in NVIDIA’s leadership in artificial intelligence (AI) despite ongoing geopolitical tensions and trade-related uncertainty. This strength is backed by solid business fundamentals rather than market hype. With AI spending continuing to accelerate worldwide, NVIDIA still appears well-positioned for long-term growth.
NVIDIA One-Month Price Return Performance
Image Source: Zacks Investment Research
NVDA’s Financial Results Reinforce the Investment Case
NVIDIA continues to deliver outstanding financial results. In the first quarter of fiscal 2027, revenues surged 85% year over year to $81.62 billion, while non-GAAP earnings per share jumped 140% to $1.87. These numbers demonstrate that demand for NVIDIA's AI products remains exceptionally strong.
Management expects this 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 around 75%, up from 72.7% a year ago, highlighting its strong pricing power and operating efficiency.
Wall Street also remains optimistic. The Zacks Consensus Estimates point to healthy revenue and earnings growth in both fiscal 2027 and fiscal 2028, suggesting that AI infrastructure spending is still in its early stages.
Image Source: Zacks Investment Research
NVIDIA's cash generation further strengthens the investment story. During the first quarter, the company generated $50.3 billion in operating cash flow and $48.6 billion in free cash flow. Cash, cash equivalents and marketable securities rose to $80.6 billion, up from $62.6 billion in the previous quarter.
Such a massive cash reserve gives NVIDIA tremendous flexibility to expand manufacturing, invest in next-generation AI technologies and reward shareholders. During the quarter, the company repurchased $19.3 billion worth of shares while paying $243 million in dividends.
NVIDIA’s AI Leadership Continues to Drive Growth
The company remains the clear leader in AI infrastructure. Cloud providers, enterprises and governments continue to invest billions of dollars in building AI data centers, and NVIDIA's GPUs remain the preferred choice for training and running advanced AI models.
The company's newest Blackwell and Vera Rubin AI platforms are seeing strong customer adoption due to their superior performance and energy efficiency. NVIDIA is also strengthening its position beyond GPUs through networking products like InfiniBand, Spectrum-X Ethernet and NVLink, allowing it to capture a larger portion of AI infrastructure spending.
The company's latest numbers highlight this leadership. During the first quarter of fiscal 2027, the data center business generated $75.25 billion in revenues, accounting for roughly 92% of total sales. Revenues from the segment climbed 92% year over year and 21% sequentially, driven by rapid deployment of Blackwell 300 systems and growing networking demand.
Another key advantage is NVIDIA's software ecosystem. CUDA, along with its expanding AI software portfolio, creates high switching costs for customers, making it difficult for competitors to take market share. This competitive advantage extends well beyond hardware and should continue supporting long-term growth.
As AI adoption expands from model training to large-scale inference and enterprise deployment, NVIDIA is positioned to benefit across every major phase of the AI investment cycle.
NVDA’s Valuation Still Looks Reasonable
Despite its recent rally, NVIDIA's valuation remains attractive relative to its growth potential.
The stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of 20.13, below the Zacks Computer and Technology sector average of 21.50.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
It also trades at a much lower valuation than several semiconductor peers. Intel carries a forward P/E of 57.33, Advanced Micro Devices trades at 45.19, while Marvell Technology is valued at 41.08.
Given NVIDIA's superior revenue growth, industry-leading margins, dominant AI position and exceptional cash generation, its current valuation appears far from excessive.
Conclusion: Buy NVIDIA Stock
NVIDIA continues to strengthen its leadership in the AI industry through rapid revenue growth, expanding profitability, unmatched cash generation and a growing ecosystem of hardware, networking and software products. Demand for AI infrastructure remains robust, and the company is well-positioned to benefit as enterprises and cloud providers continue increasing AI investments.
Even after its recent 11% rally, NVIDIA's valuation remains reasonable compared with both its growth prospects and many semiconductor peers. With strong execution, an expanding competitive moat and multiple long-term growth drivers, NVIDIA remains one of the best-positioned AI companies in the market. Investors should consider buying NVDA stock for now as the company appears well-equipped to deliver sustained long-term returns.
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Should You Buy NVIDIA Stock After Its 11% Rally in a Month?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) shares have gained 11.2% over the past month, comfortably beating the broader Zacks Computer and Technology sector, which advanced only 1.6%.
The stock has also outperformed major semiconductor peers such as Intel Corporation (INTC - Free Report) , Marvell Technology, Inc. (MRVL - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) , all of which posted declines during the same period. Over the past month, shares of Intel, Marvell Technology and Advanced Micro Devices have plunged 9.4%, 8.9% and 5.4%, respectively.
The recent rally reflects growing investor confidence in NVIDIA’s leadership in artificial intelligence (AI) despite ongoing geopolitical tensions and trade-related uncertainty. This strength is backed by solid business fundamentals rather than market hype. With AI spending continuing to accelerate worldwide, NVIDIA still appears well-positioned for long-term growth.
NVIDIA One-Month Price Return Performance
Image Source: Zacks Investment Research
NVDA’s Financial Results Reinforce the Investment Case
NVIDIA continues to deliver outstanding financial results. In the first quarter of fiscal 2027, revenues surged 85% year over year to $81.62 billion, while non-GAAP earnings per share jumped 140% to $1.87. These numbers demonstrate that demand for NVIDIA's AI products remains exceptionally strong.
Management expects this 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 around 75%, up from 72.7% a year ago, highlighting its strong pricing power and operating efficiency.
Wall Street also remains optimistic. The Zacks Consensus Estimates point to healthy revenue and earnings growth in both fiscal 2027 and fiscal 2028, suggesting that AI infrastructure spending is still in its early stages.
Image Source: Zacks Investment Research
NVIDIA's cash generation further strengthens the investment story. During the first quarter, the company generated $50.3 billion in operating cash flow and $48.6 billion in free cash flow. Cash, cash equivalents and marketable securities rose to $80.6 billion, up from $62.6 billion in the previous quarter.
Such a massive cash reserve gives NVIDIA tremendous flexibility to expand manufacturing, invest in next-generation AI technologies and reward shareholders. During the quarter, the company repurchased $19.3 billion worth of shares while paying $243 million in dividends.
NVIDIA’s AI Leadership Continues to Drive Growth
The company remains the clear leader in AI infrastructure. Cloud providers, enterprises and governments continue to invest billions of dollars in building AI data centers, and NVIDIA's GPUs remain the preferred choice for training and running advanced AI models.
The company's newest Blackwell and Vera Rubin AI platforms are seeing strong customer adoption due to their superior performance and energy efficiency. NVIDIA is also strengthening its position beyond GPUs through networking products like InfiniBand, Spectrum-X Ethernet and NVLink, allowing it to capture a larger portion of AI infrastructure spending.
The company's latest numbers highlight this leadership. During the first quarter of fiscal 2027, the data center business generated $75.25 billion in revenues, accounting for roughly 92% of total sales. Revenues from the segment climbed 92% year over year and 21% sequentially, driven by rapid deployment of Blackwell 300 systems and growing networking demand.
Another key advantage is NVIDIA's software ecosystem. CUDA, along with its expanding AI software portfolio, creates high switching costs for customers, making it difficult for competitors to take market share. This competitive advantage extends well beyond hardware and should continue supporting long-term growth.
As AI adoption expands from model training to large-scale inference and enterprise deployment, NVIDIA is positioned to benefit across every major phase of the AI investment cycle.
NVDA’s Valuation Still Looks Reasonable
Despite its recent rally, NVIDIA's valuation remains attractive relative to its growth potential.
The stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of 20.13, below the Zacks Computer and Technology sector average of 21.50.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
It also trades at a much lower valuation than several semiconductor peers. Intel carries a forward P/E of 57.33, Advanced Micro Devices trades at 45.19, while Marvell Technology is valued at 41.08.
Given NVIDIA's superior revenue growth, industry-leading margins, dominant AI position and exceptional cash generation, its current valuation appears far from excessive.
Conclusion: Buy NVIDIA Stock
NVIDIA continues to strengthen its leadership in the AI industry through rapid revenue growth, expanding profitability, unmatched cash generation and a growing ecosystem of hardware, networking and software products. Demand for AI infrastructure remains robust, and the company is well-positioned to benefit as enterprises and cloud providers continue increasing AI investments.
Even after its recent 11% rally, NVIDIA's valuation remains reasonable compared with both its growth prospects and many semiconductor peers. With strong execution, an expanding competitive moat and multiple long-term growth drivers, NVIDIA remains one of the best-positioned AI companies in the market. Investors should consider buying NVDA stock for now as the company appears well-equipped to deliver sustained long-term returns.
Currently, NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.