Nvidia's (NVDA 1.86%) quarterly earnings reports are among the most anticipated events for investors. The company provides a window into the future of technology and, particularly, artificial intelligence (AI) developments.
Shares surged about 15% since its fiscal 2026 fourth-quarter report in late February, ahead of its latest results. Now that Nvidia has reported another stellar fiscal 2027 first quarter, investors will be trying to determine where Nvidia stock goes from here. Based on management's latest outlook and the company's penchant for beating that guidance, I predict the stock will continue to push higher over the coming months.
Image source: The Motley Fool.
Jensen's latest update
CEO Jensen Huang told investors in March that he expects Nvidia's leading Blackwell and Rubin GPU chips will bring in $1 trillion in sales through 2027. In the latest report, Huang reiterated that the expansion of AI factories that need its GPU chips continues to accelerate rapidly. Huang summarized his company's enviable position, stating:
Nvidia is uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open source model, and scales everywhere AI is produced -- from hyperscale data centers to the edge.
Nvidia has room to run
With a market cap of over $5 trillion, investors may feel like the gains have already been made in Nvidia stock. Two things make Nvidia unique, though. Its revenue growth rate for a company this size is unheard of. Quarterly revenue grew 73% year over year in Q4 and another 85% in the most recent quarter. Guidance also calls for about 95% year-over-year revenue growth in the current quarter, which continues the pattern of massive sales growth. That is remarkable, especially given that no sales to China are included in that guidance.
Nvidia's gross profit margin also continues to hover around 75%, despite soaring component prices, such as memory chips. That profitability level means its valuation based on the price-to-earnings (P/E) ratio remains reasonable. Based on expected fiscal 2027 earnings, Nvidia's P/E is still just about 26. That compares favorably to Alphabet, Amazon, and Apple.
NASDAQ: NVDA
Key Data Points
Shareholder returns
While Nvidia already had an aggressive share repurchase program to return capital to shareholders, it has also announced an increase in its $0.01 quarterly dividend to $0.25 per share. That, along with a new $80 billion share repurchase plan, means it is committing another $100+ billion to return to shareholders.
Considering the company generated $48.5 billion in free cash flow in Q1 alone, that makes sense and shows its commitment to return excess cash to shareholders.
Nvidia's underlying momentum will remain tied to the expanding use of AI, particularly agentic AI. The company has even reorganized its revenue reporting, with two new categories: data center and edge computing. Edge computing includes the processing equipment needed for agentic and physical AI.
The most recent earnings report shows Nvidia's growth is hardly slowing. It is, in fact, accelerating, and the company is generating so much cash that it has instituted a much more meaningful dividend. With AI factory growth still in its relatively early stages, Nvidia stock remains a buy at its recent valuation.
