NVIDIA Soars 27% in Six Months: Is the Stock Still Worth Buying?

Core Insights - NVIDIA Corporation (NVDA) shares have increased by 27.4% over the past six months, outperforming the Zacks Semiconductor – General industry's growth of 25.1% [1] - The stock's performance is largely attributed to the surge in demand for artificial intelligence (AI) technologies, particularly for its graphics processing units (GPUs) and computing solutions [1] Performance Comparison - NVIDIA has outperformed major semiconductor companies such as QUALCOMM (QCOM), STMicroelectronics (STM), and Texas Instruments (TXN), with QUALCOMM gaining 12.6%, while STMicroelectronics and Texas Instruments saw declines of 9.8% and 10.6%, respectively [2] Data Center Growth - The Data Center segment is NVIDIA's primary growth driver, generating $51.22 billion in revenues in Q3 of fiscal 2026, accounting for 89.8% of total sales, reflecting a 66% year-over-year increase and 25% sequential growth [6][10] - The demand for NVIDIA's Blackwell and Hopper 200 GPU computing platforms has significantly contributed to this growth, as cloud providers and enterprises expand their AI infrastructure [7][8] Financial Performance - In Q3 of fiscal 2026, NVIDIA's revenues rose by 62% year-over-year, with non-GAAP earnings per share increasing by 60% [11] - The company anticipates Q4 revenues to reach $65 billion, a 66% year-over-year increase, with a gross margin projected at 75%, indicating a 150-basis-point improvement from the previous year [12] Cash Flow and Shareholder Returns - NVIDIA generated a free cash flow of $23.75 billion in Q3 and $66.53 billion in the first three quarters of fiscal 2026, ending Q3 with $60.6 billion in cash and equivalents [15] - The company returned $243 million to shareholders through dividends and repurchased $12.46 billion in stocks during Q3, with total buybacks reaching $36.27 billion in the first three quarters [16] Valuation - Despite the stock's rally, NVIDIA trades at a forward 12-month price-to-earnings (P/E) ratio of 27.26X, which is lower than the industry average of 29.03X [17] - Compared to peers, NVIDIA has a higher P/E than QUALCOMM and STMicroelectronics but lower than Texas Instruments, which trades at 28.39X [20] Investment Recommendation - NVIDIA's strong fundamentals, leadership in AI, and positive growth outlook present a compelling case for investment, supported by reasonable valuations [21]