Buy the Dip in Nvidia Stock After Q4 Earnings, or is it Too Soon?

Core Viewpoint - Nvidia reported impressive Q4 results with sales of $68.12 billion and EPS of $1.62, reflecting year-over-year growth of 73% and 82% respectively, yet the stock has declined over 6% post-report due to investor concerns about the sustainability of the AI boom and concentration risks [1][2]. Financial Performance - Q4 sales reached $68.12 billion, with an EPS of $1.62, marking significant year-over-year increases of 73% and 82% [1]. - For fiscal 2027, Nvidia provided a revenue guidance of $78 billion, exceeding analysts' expectations of $72.8 billion, indicating at least 73% year-over-year growth and 12% sequential growth [6]. - EPS estimates for FY27 and FY28 have increased over 3% in the past week, with a projected annual earnings leap of 60% in FY27 and a further 20% increase in FY28 to $9.13 per share [8]. Market Concerns - Analysts express skepticism regarding the sustainability of AI spending by hyperscalers, questioning whether the pace of AI monetization justifies the current expenditures [3]. - Nvidia's revenue is heavily reliant on data centers, with 90% coming from five major cloud providers, raising concerns about potential order slowdowns from these customers [4]. - Increased competition from AMD and the development of in-house AI accelerators by major hyperscalers like Alphabet and Amazon pose risks to Nvidia's market position and profit margins [5]. Valuation Metrics - Nvidia is currently trading near its lowest forward P/E valuation in a decade, offering a discount compared to its historical median of 45X and below its peak of 118X [10]. - The stock is trading at a slight premium to the S&P 500 and below the Zacks Semiconductor-General Industry average of 27X [10]. Conclusion - Despite concerns regarding AI sustainability, Nvidia continues to show strong demand and structural dominance in the market, suggesting that it remains a compelling investment opportunity [13]. - The positive trend in EPS revisions supports a strong buy rating for Nvidia stock [14].