May 28 marked Nvidia’s (NVDA) first-quarter results for 2026. While revenue reports might not be the thrill of the year, they are among the rare moments investors get to learn about the company’s performance.
Much has transpired since Nvidia’s last update, and there’s been a noticeable wave of pessimism regarding inventory leading up to this date. Yet, I think there’s really no cause for concern here; it’s possible that our inventory could surge after the revenue announcement on May 28.
Nvidia’s largest clients suggest positive outcomes
What gives me confidence that the company will deliver solid quarterly results? One of its major clients has indicated they will continue their current purchasing practices.
Nvidia specializes in Graphics Processing Units (GPUs), which are essential for complex tasks like video game graphics and, more recently, AI model training. Their GPU holds a substantial market share in data centers, exceeding 90%, which is quite impressive.
The main worry heading into the quarterly report is that significant clients in the semiconductor industry have postponed their orders. This has investors feeling uneasy, as the stock price seems to have priced in high expectations.
However, feedback from AI Hyperscalars, a key customer, suggests that spending in data centers remains strong. Furthermore, Meta Platforms has even raised its Capital Expenditure (CAPEX) guidance.
Nvidia’s ongoing growth is crucial, especially as it signifies a potential increase in the company’s stock value.
The gap between price-to-earnings (P/E) ratios indicates that analysts anticipate significant revenue growth this year, with stock trading forecasting about 51% growth and a revenue multiple of 38.7 times, along with an advance revenue multiple of 25.7 times.
This will be the last quarter where Nvidia’s P/E appears typical. Investors shouldn’t be alarmed if they report a drop in profits, particularly considering the necessary $5.5 billion write-off due to export restrictions to China. The key takeaway, though, is the anticipated strong growth in the years to come.
Robust long-term outlook
The one-year returns look promising, but for those focused on a three to five-year timeline, the opportunities are even greater. CEO Jensen Huang pointed out that Nvidia forecasts data center Capex climbing from $400 billion in 2024 to $1 trillion by 2028.
This indicates incredible growth, and if it pans out, the future looks bright regardless of stock performance post-first quarter.
In the last year, Nvidia has raked in $115 billion from its data center segment, accounting for around 30% of its total data center spending. If Huang’s $1 trillion forecast materializes and the company maintains its 30% share, that would lead to $300 billion in GPU sales from data centers.
This type of growth is remarkable and makes for a solid investment. Even if those high targets aren’t fully met, Nvidia remains a leader in the GPU field, and considerable AI infrastructure development is ongoing.
