Nvidia Continues to See Unstoppable Growth, but Is the Stock Still a Buy?

Core Insights - Nvidia demonstrated remarkable growth in fiscal 2025, with revenue increasing by 114% to $130.5 billion, marking the second consecutive year of more than doubling revenue [3] - The company's Q4 revenue surged 78% year over year to $39.3 billion, driven primarily by AI demand, with adjusted EPS climbing 71% to $0.89, surpassing analyst expectations [4] - Nvidia's data center business led revenue growth, surging 93% year over year to $35.6 billion, supported by the H200 Hopper chip and the new Blackwell GPU architecture [5] Revenue Breakdown - Nvidia's data center revenue constituted a significant portion of its overall revenue, with large cloud computing providers accounting for about half of this segment [6] - Consumer internet revenue tripled, while enterprise revenue doubled, indicating broad adoption across various industries [6] - Gaming revenue declined by 11% to $2.5 billion due to supply constraints, while professional visualization revenue increased by 10% to $511 million [7] Financial Performance - The company generated operating cash flow of $16.6 billion and free cash flow of $15.6 billion in Q4, ending the year with net cash and marketable securities of $43.2 billion [8] - Nvidia plans to initiate a quarterly dividend of $0.01 starting next quarter [8] Future Projections - For fiscal Q1, Nvidia projects revenue of around $43 billion, representing approximately 65% year-over-year growth, primarily driven by the Blackwell GPU architecture [9] - The company anticipates a gross margin of 70.6%, down from 78.4% a year ago, but expects improvements throughout the year [9] - Nvidia is set to launch its new Ultra GPU architecture in the second half of 2025 [10] Market Position - Nvidia's stock is considered inexpensive relative to its growth, with a forward P/E ratio of just over 28 and a PEG ratio under 0.5, indicating potential undervaluation [11] - The company is positioned to benefit significantly from ongoing AI infrastructure spending, with major investments announced by leading cloud computing companies and other industry players [12][13] - Despite the cyclical nature of the semiconductor business, Nvidia appears well-positioned for growth in the current year, making it an attractive investment opportunity [14]