Nvidia has played a pivotal role in the rise of artificial intelligence (AI), positioning itself as a leader in the sector. Its chips are essential for most AI projects, and the company’s stock has performed remarkably well recently. However, with a staggering market valuation approaching $5 trillion, one can’t help but wonder if there’s still potential for growth in its stock price.
Interestingly, there’s a noticeable disconnect between Nvidia’s business growth and how its stock has been behaving. While the company reported impressive quarterly growth last month, the stock has remained largely stagnant—around 13% below its record high—while the broader market has seen an uptick.
Remember Nvidia back in 2009? There’s a signal emerging again. A “double down” signal is appearing for a smaller chipmaker, reminiscent of what Nvidia experienced back then.
So, does this mean it’s time to consider buying?
Continued Demand
Nvidia’s first quarter for fiscal 2027 (ending April 26, 2026) was quite remarkable. Revenues skyrocketed 85% year-on-year to $81.6 billion, outpacing growth from previous quarters by a substantial margin, which is rather unusual for a company of this size.
This surge can largely be attributed to Nvidia’s data center division, driven by AI chip demand, which saw a 92% year-over-year growth, making up more than 90% of overall sales.
The company seems optimistic about sustaining this momentum. In its recent earnings call, Nvidia projected revenue from its existing Blackwell chips and next-gen Rubin chips could reach about $1 trillion by the end of 2027, significantly up from about $500 billion last year. They’re also expecting second-quarter revenues around $91 billion, which interestingly assumes no data center revenue from the Chinese market.
“The demand is growing rapidly, and the reason is simple: agentic AI has arrived,” mentioned Jensen Huang, Nvidia’s CEO, during the earnings call.
These numbers come with impressive profits as well. Nvidia’s gross margins hit nearly 75% last quarter, the company returned about $20 billion to shareholders, and there’s another $80 billion up for share buybacks in the pipeline. The vast majority of their hardware leverages Nvidia’s proprietary software, making it tricky for competitors to displace them, even if they were able to produce comparable chips.
