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Recently, the beloved Nvidia (NVDA - Free Report) has hit fresh all-time highs. As we know, stocks making new highs tend to make even higher highs, particularly when a company’s earnings outlook remains positive.
And we’ve all become familiar with the bullish outlook surrounding the stock thanks to the AI frenzy, with analysts consistently revising expectations higher following record-breaking quarterly results.
Should investors keep tapping into the momentum? Let’s look at how the Mag 7 member stacks up.
Should You Buy Nvidia Shares?
Nvidia’s Data Center results have been remarkable, consistently blowing away our consensus expectations in each of its last five releases. As shown below, the beats have not been small by any means, with the most recent totaling a sizable $1.4 billion amid another period of scorching-hot demand.
Image Source: Zacks Investment Research
CEO Jensen Huang provided yet another bullish long-term comment following the release, confirming strong demand for Hopper and anticipation for Blackwell. ‘NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.’
Unsurprisingly, a bigger question is the valuation picture, with many wondering if shares are too stretched after a massive run. But the reality is that shares aren’t expensive on a relative basis, with the current 40.9X forward 12-month earnings multiple comparing favorably to the 50.7X five-year median. The current PEG also works out to 1.2X, again well beneath historical averages.
Image Source: Zacks Investment Research
It’s worth noting here that NVDA shares traded well above current valuation levels in 2020 and 2021 when the AI theme had yet to emerge fully. Historically strong growth has helped keep multiples now.
The company’s margins have also been historically strong in recent quarters, aiding its profitability picture in a big way. Please note that the chart below is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Remember that NVDA is among the ‘late’ reporters during earnings season, with its next quarterly release scheduled for November 19th. Analysts have been bullish for the release over the recent months, with the $0.74 per share expected up 9% since August and suggesting an 85% climb from the year-ago period.
Image Source: Zacks Investment Research
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In addition, the company’s Gaming segment has returned to solid growth following a post-pandemic slowdown, with Gaming revenue of $2.9 billion climbing 16% year-over-year and continuing a recent streak of positive surprises. While Data Center results are undoubtedly the focal point, the Gaming segment has also provided modest tailwinds over recent periods and shouldn’t be overlooked.
Image Source: Zacks Investment Research
Putting Everything Together
Beloved Nvidia has recently breached all-time highs again following a few months of boring price action, undoubtedly exciting investors. The favorable price action bodes highly favorably for further gains, especially given its bullish earnings outlook.
The valuation picture remains sound thanks to remarkable growth, with demand for its AI solutions remaining red-hot. Modest tailwinds from a recovery in its Gaming segment post-pandemic, a huge $50 billion buyback, and historically high margins also keep the stock’s outlook bright.
Nvidia (NVDA - Free Report) is a clear pick for those seeking exposure to AI.
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Nvidia Shares Hit All-Time High: Time to Buy?
Recently, the beloved Nvidia (NVDA - Free Report) has hit fresh all-time highs. As we know, stocks making new highs tend to make even higher highs, particularly when a company’s earnings outlook remains positive.
And we’ve all become familiar with the bullish outlook surrounding the stock thanks to the AI frenzy, with analysts consistently revising expectations higher following record-breaking quarterly results.
Should investors keep tapping into the momentum? Let’s look at how the Mag 7 member stacks up.
Should You Buy Nvidia Shares?
Nvidia’s Data Center results have been remarkable, consistently blowing away our consensus expectations in each of its last five releases. As shown below, the beats have not been small by any means, with the most recent totaling a sizable $1.4 billion amid another period of scorching-hot demand.
Image Source: Zacks Investment Research
CEO Jensen Huang provided yet another bullish long-term comment following the release, confirming strong demand for Hopper and anticipation for Blackwell. ‘NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.’
Unsurprisingly, a bigger question is the valuation picture, with many wondering if shares are too stretched after a massive run. But the reality is that shares aren’t expensive on a relative basis, with the current 40.9X forward 12-month earnings multiple comparing favorably to the 50.7X five-year median. The current PEG also works out to 1.2X, again well beneath historical averages.
Image Source: Zacks Investment Research
It’s worth noting here that NVDA shares traded well above current valuation levels in 2020 and 2021 when the AI theme had yet to emerge fully. Historically strong growth has helped keep multiples now.
The company’s margins have also been historically strong in recent quarters, aiding its profitability picture in a big way. Please note that the chart below is on a trailing twelve-month basis.
Remember that NVDA is among the ‘late’ reporters during earnings season, with its next quarterly release scheduled for November 19th. Analysts have been bullish for the release over the recent months, with the $0.74 per share expected up 9% since August and suggesting an 85% climb from the year-ago period.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In addition, the company’s Gaming segment has returned to solid growth following a post-pandemic slowdown, with Gaming revenue of $2.9 billion climbing 16% year-over-year and continuing a recent streak of positive surprises. While Data Center results are undoubtedly the focal point, the Gaming segment has also provided modest tailwinds over recent periods and shouldn’t be overlooked.
Image Source: Zacks Investment Research
Putting Everything Together
Beloved Nvidia has recently breached all-time highs again following a few months of boring price action, undoubtedly exciting investors. The favorable price action bodes highly favorably for further gains, especially given its bullish earnings outlook.
The valuation picture remains sound thanks to remarkable growth, with demand for its AI solutions remaining red-hot. Modest tailwinds from a recovery in its Gaming segment post-pandemic, a huge $50 billion buyback, and historically high margins also keep the stock’s outlook bright.
Nvidia (NVDA - Free Report) is a clear pick for those seeking exposure to AI.