The Zacks Analyst Blog NVIDIA, Meta, Alphabet, Microsoft and Amazon

Core Viewpoint - NVIDIA Corp. is positioned as a lucrative investment opportunity despite recent stock price declines, driven by strong earnings and future growth potential in AI and data center markets [2][4][22]. Financial Performance - NVIDIA reported adjusted earnings of $0.89 per share for Q4 fiscal 2025, exceeding the Zacks Consensus Estimate of $0.84 per share, and revenues of $39.33 billion, surpassing the estimate of $37.72 billion by 4.3% [5]. - The company's non-GAAP gross margin was 73.5%, reflecting a year-over-year contraction of 3.2% and a sequential decline of 1.5% due to higher costs in the Data Center segment [6]. - Data Center revenues reached $35.58 billion, a 93% year-over-year increase, with Computing revenues at $32.56 billion and Networking revenues at $3.02 billion [7]. Guidance and Future Outlook - NVIDIA anticipates Q1 fiscal 2026 revenues of $43 billion (+/-2%), exceeding the current Zacks Consensus Estimate of $41.06 billion, with a projected non-GAAP gross margin of 71% [9]. - The company expects robust demand for AI-powered GPUs, with significant spending from major data center operators totaling $325 billion in 2025 [11]. Innovations and Growth Drivers - NVIDIA is the largest chipset supplier for AI infrastructure, with new AI chip architecture called Rubin expected to launch in 2026 [14]. - The Automation segment saw revenues of $570 million, up 102.9% year-over-year, driven by self-driving platforms and a focus on ADAS and robotics [15]. Valuation and Market Position - NVIDIA has a return on equity (ROE) of 122.83%, significantly higher than the S&P 500's ROE of 17.1% and the industry's ROE of 6.4% [18]. - The current net margin stands at 55.85%, compared to the industry's 8.4% and the S&P 500's 12.57% [19]. - The short-term average price target for NVIDIA shares indicates a potential increase of 35% from the last closing price of $120.15, suggesting a maximum upside of 83.3% [21]. Investment Thesis - Despite a year-to-date decline of -10.5% in share price, analysts expect earnings estimate revisions to trend higher, making NVIDIA a favorable investment opportunity [22][23].