Examining the Value of Nvidia as a $3 Trillion Equity Investment Option
Nvidia, the powerful figure in the tech world, shattered records with its Q4 earnings in fiscal year 2025. This period saw a staggering revenue of $39.3 billion, up 12% sequentially and an impressive 78% year-on-year. Earnings per share surged to $0.89, up 71% year-on-year, as the gaming titan leveraged booming demand for its AI-driven computing, notably its Blackwell AI platform.
The data center segment led the charge, setting a new high of $35.6 billion, a 93% increase year-on-year and a 16% surge sequentially, fueled by hyperscaler adoptions and rampant expansion of Nvidia's GB200 systems across AWS, Microsoft Azure, and Google Cloud. In contrast, the gaming segment saw a softer performance, reporting revenue of $2.5 billion, a 22% dip sequentially and a 11% year-on-year decline. Despite the通 translate:slight decrease, Nvidia remains bullish on AI-driven gaming innovations.
Looking ahead, Nvidia anticipates Q1 fiscal year 2026 revenue of approximately $43 billion, with forecasted gross margins of around 70.6% (GAAP) and 71.0% (non-GAAP). The company remains undeterred and recently announced strategic collaborations, including partnerships with Verizon for AI-powered 5G and collaborations with biotech leaders in healthcare AI, as well as its first R&D center in Vietnam.
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Analysts are bullish, projecting robust EPS growth for FY 2026, standing at $4.54, up from $2.99 in FY 2025. Further projections for FY 2027 and FY 2028 are currently at $5.70 and $6.46, respectively.
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While Nvidia's remarkable growth rates are hard to ignore, investors should be cautious regarding its lofty market capitalization, exceeding $3 trillion, and its high valuation metrics, such as a forward P/E ratio of 27, a price-to-sales ratio of 22.5, and a price-to-book value ratio of 37. A market correction or any hiccups in the growth trajectory could lead to investor skepticism and potentially dampen enthusiasm.
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Fortunately, for those seeking AI investment opportunities without the premium valuation of Nvidia, there are other options. These include AI-focused stocks like Upstart Holdings Inc. (UPST), SoundHound AI Inc. (SOUN), and Yiren Digital Ltd. (YRD), as well as AI-centric ETFs such as the Indxx Global Robotics & Artificial Intelligence Thematic Index and the Nasdaq CTA Artificial Intelligence & Robotics Index.
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As AI continues to revolutionize global industries, it’s becoming increasingly clear that this technology is poised to be a major growth story for years to come.
- With Nvidia's Q4 earnings exceeding expectations, John Buckingham, the editor of The Prudent Speculator's Newsletter, recommends value stocks such as Lam Research (LRCX) and other AI-focused companies as potential investments for those seeking opportunities in the rapidly growing AI sector.
- In his latest article for the newsletter, Buckingham highlights the strength of Nvidia's earnings, particularly its 78% year-on-year increase in earnings per share, and suggests that investors consider preloading resources to stay informed on the latest AI and Nvidia news through the preloadresourcesendpoint.
- As the newsletter points out, the artificial intelligence sector is showing immense potential, and while Nvidia's high valuation metrics may be a concern for some investors, other options like AI-focused stocks and ETFs like the Indxx Global Robotics & Artificial Intelligence Thematic Index and the Nasdaq CTA Artificial Intelligence & Robotics Index, may offer more attractive entry points for those looking to capitalize on the growth of AI.