Nvidia(US:NVDA) 3 6 Ke·2025-07-02 03:15Core Insights - Nvidia's stock price has rebounded approximately 80% since its low of $86.62 in early April, reaching an all-time high, despite a slight slowdown in growth [1][15] - The company's fundamentals remain strong, with a current price-to-sales ratio slightly below historical averages, indicating potential undervaluation as Sovereign AI is expected to accelerate growth in the coming years [1][13] Financial Performance - For Q1 FY2026, Nvidia reported total revenue of $44.062 billion, a 69% year-over-year increase, marking a historical high, although growth has slightly decelerated compared to the previous quarter [3] - The adjusted gross margin decreased by 12.5 percentage points quarter-over-quarter and 17.9 percentage points year-over-year to 61%, attributed to $4.5 billion in H20-related costs due to new U.S. export controls [3][4] - Adjusted earnings per share (EPS) were $0.81, a 33% increase year-over-year, exceeding market expectations by $0.06; without H20-related costs, EPS could have reached $0.96, indicating a 57% growth [4] Business Segments - Revenue from the data center segment reached $39.112 billion, a 73% year-over-year increase, driven by a surge in demand for inference [6] - Nvidia is nearing completion of the transition from Hopper to Blackwell architecture, with 70% of revenue from the latter, and plans to ramp up production of Blackwell Ultra [6] Cash Flow and Capital Allocation - Nvidia's operating cash flow for Q1 was $27.414 billion, a 79% year-over-year increase, indicating strong cash generation capabilities [8] - The company spent $1.3 billion on capital expenditures and repurchased $14.1 billion in stock during the quarter, reflecting confidence in its business outlook [8] Future Guidance - For Q2, Nvidia expects revenue to be around $45 billion, a 50% increase year-over-year, although this represents a significant slowdown from the previous quarter's growth rate [10] - The company anticipates adjusted gross margins to be around 72%, slightly improving from Q1 but lower than the previous year's 75.7% [10] Market Outlook - Recent geopolitical developments, including Trump's Middle East visit, are seen as potential catalysts for Sovereign AI investments, which could drive future demand for Nvidia's chips [11] - The European Commission's statement regarding the need for 3 million GPUs for future "gigafactories" signals ongoing demand for Nvidia's products [11] Valuation Perspective - Despite a recent recovery in Nvidia's price-to-sales ratio, it remains within normal ranges and below the average of the past three years, suggesting potential undervaluation [13] - The anticipated slowdown in growth is reflected in the current valuation, but the long-term potential from Sovereign AI investments may not be fully priced in [13][15]