Wondering if it’s too late to invest in your first $4 trillion company?
Back in April, I pointed out Nvidia (NVDA) as one of just two tech stocks that seemed surprisingly undervalued at around $100 per share. Fast forward a few months, and the stock surged to $173, propelling the chip manufacturer to become the world’s most valuable public company, with a market cap of $4.2 trillion. With stocks nearing all-time highs, let’s delve into Nvidia’s recent earnings, their management’s outlook, and whether or not it feels like a good time to buy.
Nvidia’s remarkable growth amidst geopolitical hurdles
Nvidia’s impressive ascent is largely attributed to phenomenal growth, highlighted by its fiscal 2026 Q1 results. The company reported revenue of $44.1 billion, marking a 69% increase year-over-year and a 12% rise from the previous quarter. The standout was the data center segment, which alone contributed $39.1 billion, fueled by strong demand from cloud providers, government entities, and businesses developing AI infrastructure.
As for profits, Nvidia announced a net income of $18.8 billion in the quarter—up 26% from the previous year but down 15% from the last quarter. The drop stemmed mainly from a $4.5 billion inventory charge due to U.S. export restrictions on the H20 chip line intended for the Chinese market. In April, new regulations required Nvidia to acquire a license to sell these chips to China, leading to a write-down of excess inventory and commitments.
CEO Jensen Huang stated during a revenue call that the “Chinese market worth $50 billion is effectively closed off to the U.S. industry.” He expressed concern that shielding Chinese manufacturers from U.S. competition would ultimately bolster their positions abroad, weakening the U.S.’s standing.
Still, Nvidia recently announced efforts to obtain approval to restart H20 sales in China. They indicated that U.S. authorities plan to issue the necessary licenses, and shipments are expected to resume soon. Huang also reiterated Nvidia’s commitment to increasing investments in the U.S., creating jobs, boosting domestic AI infrastructure, and expanding manufacturing.
As it stands, it seems Nvidia is managing the geopolitical turbulence with relatively minimal long-term impact. Following this update, shares climbed by 4%, indicating that investors might be feeling that the worst is behind.
Nvidia had originally set sights on $45 billion in revenue for Q2 but faced an $8 billion shortfall due to those export restrictions. These results might still improve as those restrictions are lifted later in the second quarter.
Nvidia’s solid financial position offers management flexibility
Nvidia reported a robust $53.7 billion in cash and marketable securities this past quarter, which is a significant 71% rise from the $31.4 billion of the previous year. This cash produced $515 million in interest income during the quarter, eclipsing the $244 million spent on dividends.
With a modest dividend yield of just 0.02%, it’s clear that Nvidia’s management favors stock buybacks as the primary method of returning capital to shareholders. In the fiscal year’s first quarter, the company bought back $14.1 billion in shares, up from $7.7 billion the year before. This might feel small compared to Nvidia’s $4.2 trillion market cap, but it shows a certain confidence in the company’s long-term value, even after facing a notable inventory increase. Stock buybacks could also enhance the value of existing shares as the total share count reduces—overall, shares have dropped by about 2% over the past three years.
Will you still invest in Nvidia?
At this point, Nvidia’s stock no longer feels like a steal, trading at nearly 40 times earnings. However, evaluations alone don’t capture the complete picture. Nvidia is a prominent player in AI computing, solidifying its position with each product cycle. Just look at the tech giants like Amazon, Apple, Meta Platforms, and Microsoft. By 2025, their combined spending on technology, including data centers, is projected to reach at least $320 billion, up from $200 billion in 2024.
Huang emphasized Nvidia’s growing leadership in AI, dubbing this the “next industrial revolution.” The company continues to drive innovation forward, and with the rollout of the Blackwell NVL72 AI Supercomputer—a “thinking machine” designed for advanced reasoning—this momentum seems set to continue.
No doubt, Nvidia stands at the forefront of this transformation. Still, as stock prices have soared in recent months, some investors might feel hesitant to jump in right now. For those with a long-term view, more gradual methods like dollar-cost averaging could be a smart way to engage with one of the most pivotal companies in the tech landscape.
