3 Reasons Why Nvidia Stock Is Still Undervalued and Worth Buying in March

Core Viewpoint - Nvidia's stock, despite a remarkable 1,110% increase since the start of 2023, is still considered a bargain due to its high-margin growth, relentless innovation, and aggressive stock repurchase strategy. Group 1: High-Margin Growth - Nvidia reported $215.9 billion in revenue for fiscal 2026, an eightfold increase from $27 billion in fiscal 2023, primarily driven by data center growth [3] - Data center revenue reached $193.7 billion in fiscal 2026, up from $15 billion in fiscal 2023, highlighting the transformative impact of artificial intelligence on Nvidia's business [3] - Nvidia achieved 71% gross margins, 60.6% operating margins, and 55.6% net profit margins in fiscal 2026, resulting in a net income of $120.1 billion [4] Group 2: Relentless Innovation - Nvidia continues to enhance its product offerings, countering concerns about margin decline by delivering significant performance improvements that justify premium pricing [6] - The Blackwell Ultra architecture upgrade offers up to 50 times better performance and 35 times lower costs for agentic AI compared to the previous Hopper platform [7] - The upcoming Rubin platform integrates six different chips for improved performance and cost efficiency, showcasing Nvidia's commitment to "extreme codesign" for data center applications [8] - Nvidia's roadmap includes a focus on agentic AI, with expectations of exponential growth in physical AI applications, which should help maintain high margins [9] Group 3: Stock Repurchases - Nvidia's high margins enable substantial excess cash flow, allowing for significant stock buybacks without compromising its balance sheet or innovation funding [10] - In fiscal 2026, Nvidia repurchased $40.1 billion in stock, an increase from $33.7 billion in fiscal 2025 and $9.5 billion in fiscal 2024 [10] - Although Nvidia's market cap is $4.3 trillion, the buybacks will gradually reduce share count and enhance earnings-per-share growth over time [11] - At 39.9 times fiscal 2026 earnings, Nvidia may not appear undervalued, but its high-margin earnings and growth potential position it as a better value compared to the S&P 500, which trades at 29.9 times earnings [11]