Nvidia (NASDAQ: NVDA) supplies the world's best graphics processing units (GPUs) for data centers, which are the primary chips used in artificial intelligence (AI) development. The company is gearing up to launch a new chip architecture this year that will reset the benchmark for the industry, and if history is any indication, demand will significantly outstrip supply. Nvidia is scheduled to report its operating results for its fiscal 2026 fourth quarter (ended Jan. 25) on Feb. 25, and investors will be f ...

Core Viewpoint - Many AI stocks are perceived as expensive, but there are several undervalued options with significant growth potential [1][2]. Group 1: Advanced Micro Devices (AMD) - AMD's forward price-to-earnings ratio is 39.7, and its trailing P/E ratio is 131.6, indicating a high valuation at first glance [3][4]. - The stock's PEG ratio is notably low at 0.5, suggesting it is one of the cheapest AI stocks available [3]. - AMD anticipates revenue from AI data centers to grow at a compound annual growth rate (CAGR) of over 80% in the next three to five years [5]. - The company is gaining market share in server CPUs and is making progress in the GPU market with its Instinct MI350 Series [6]. Group 2: Micron Technology - Micron's PEG ratio is just below 0.7, and shares trade at 12.3 times forward earnings, indicating it is not an expensive commodity [7]. - The company has secured contracts for its entire 2026 high-bandwidth memory (HBM) supply, reflecting strong demand and supply constraints [9]. - Micron expects the total addressable market for HBM to reach $100 billion by 2028, with a CAGR of approximately 40% [9]. Group 3: Nvidia - Nvidia's PEG ratio is 0.7, and it is expected to experience strong growth over the next five years, making its current valuation more justifiable [10]. - The company projects annual AI infrastructure spending to reach $3 trillion to $4 trillion by the end of the decade, driven by emerging technologies [12]. - Nvidia's Blackwell GPUs are currently the most powerful AI chips, with plans to launch even more advanced Rubin GPUs later this year [13].

Americas Technology: Hardware: AI Project Pulse: January 2026 29 January 2026 | 1:57PM EST Equity Research We summarize recent announcements and developments in the AI project space across neoclouds, sovereigns, and enterprise made in January 2026. This represents select project announcements and is not indicative of the total AI infrastructure opportunity. We also include an interactive data center project cost calculator to provide a high-level framework on how to size spend by total power or number of XP ...

Core Insights - Advanced Micro Devices (AMD) is becoming a significant player in the data center GPU market, which is crucial for AI development, alongside its existing consumer electronics business [1][7] - AMD's stock experienced a 77% increase last year due to advancements in AI, but has since declined by 21% from its peak, raising questions about potential buying opportunities ahead of new product launches [2] Data Center GPU Developments - AMD's current leading data center GPU, the MI355X, is built on the Compute DNA (CDNA) 4 architecture and is being adopted by major data center operators like Oracle, which ordered over 131,000 units last year [3] - The upcoming MI450 Series, set to launch later this year, is expected to deliver up to 36 times more performance when integrated with specialized software and hardware compared to the previous generation [4] - AMD's MI450 Series is anticipated to outperform Nvidia's Blackwell GPUs, although Nvidia is also advancing with a new architecture called Rubin, expected to set new industry benchmarks [5] Competitive Landscape - The competition between AMD and Nvidia is intensifying as both companies strive to meet the increasing performance demands of AI developers [6] - AMD is projected to launch its most powerful data center chips in 2026, indicating a strong future demand from AI developers, even as it continues to catch up to Nvidia [7]

Core Insights - Nvidia is facing pressure from investors regarding its cash management strategy, particularly after announcing significant investments totaling $18 billion in 2023, including a $2 billion stake in Synopsys and a planned $100 billion purchase of OpenAI shares [1][4] - The company has seen a substantial increase in cash reserves, rising from $13.3 billion in January 2023 to $60.6 billion by the end of the third quarter, prompting discussions on whether to prioritize stock buybacks, dividends, or further investments [4][6] - Nvidia's stock has shown a year-to-date increase of 37%, but analysts suggest it may continue to consolidate around current levels without clear bullish momentum [2] Financial Performance - Nvidia's market capitalization is currently at $4.43 trillion, making it the most valuable company globally [3] - The company returned $37 billion to shareholders through share repurchases and dividends in the first nine months of fiscal 2026, with $62.2 billion remaining under its share repurchase authorization [5] - Analysts project Nvidia will generate $96.85 billion in free cash flow this year and $576 billion over the next three years, indicating strong financial health [7] Investment Strategy - Nvidia is prioritizing stock buybacks over dividends, with a minimal quarterly dividend of $0.01 per share, resulting in a yield of just 0.02% [6] - The company has increased its R&D expenses by 38.6% year-over-year to $4.7 billion in the third quarter, while also investing $8.2 billion in private companies [8] - Critics argue for more focus on R&D and strategic acquisitions, but Nvidia's management believes current investments and buybacks are the most logical use of capital [9] Analyst Outlook - Wall Street analysts maintain a positive outlook on Nvidia, with 44 out of 48 analysts rating it a "Strong Buy" and an average price target of $252.67, suggesting a 37% upside potential from current levels [10]

Core Viewpoint - Nvidia is highlighted as one of the best growth stocks to buy for 2026, despite its significant price increase over the past three years [2]. Group 1: Nvidia's Growth Potential - Nvidia has transitioned from being a leader in GPUs for various sectors to deriving most of its income from data centers [4]. - The company is well-positioned to benefit from the surge in artificial intelligence (AI) spending, particularly since early 2023 [5]. - Nvidia's networking revenue has increased by 264% over the past year, surpassing revenue from gaming, AI PCs, professional visualization, and automotive combined [6]. Group 2: Demand and Orders - Demand for Nvidia's GPUs continues to exceed supply, indicating strong growth potential for the future [7]. - Nvidia announced $500 billion in AI chip orders for its Blackwell and upcoming Rubin GPUs, which includes both booked orders and expected revenue through the end of fiscal 2026 [7]. - There is potential for the $500 billion order figure to increase as Nvidia anticipates taking more orders [7]. Group 3: Competitive Landscape - Despite competition from companies like Broadcom and AMD, Nvidia's growth story remains intact, with sufficient market opportunity for continued earnings growth [8].

Core Viewpoint - Nvidia is currently the world's most valuable company with a market capitalization of approximately $4.3 trillion, and analysts believe its growth potential could lead to a market cap of $20 trillion by 2030, representing a 360% upside from current levels [1][2]. Group 1: Revenue Growth and Market Potential - Nvidia's data center business generated $51.2 billion in revenue for the third quarter of fiscal 2026, indicating an annual run rate of about $200 billion [5]. - Analysts project that Nvidia's data center revenue will grow at a compound annual growth rate (CAGR) of 36% from 2025 to 2030, potentially reaching a run rate of $931 billion by the end of that period [5][6]. - The expected increase in AI infrastructure spending by hyperscalers is projected to be nearly $500 billion next year, reflecting over a 50% increase in capital expenditures [9]. Group 2: Market Share and Competitive Position - Nvidia currently captures about 50% of AI infrastructure spending and will need to increase its market share to approximately 60% to meet growth forecasts [12]. - The company has a significant order backlog of $307 billion, primarily from its Blackwell chips, upcoming Rubin GPUs, and data center services [14]. - Nvidia is expanding into new markets, including AI telecommunications through a strategic investment in Nokia, and collaborating with Intel for custom CPU designs [16]. Group 3: Industry Trends and Future Opportunities - McKinsey & Company forecasts a $7 trillion market opportunity for AI infrastructure over the next five years, with about $5 trillion allocated for AI workloads, indicating robust demand for Nvidia's GPUs [11][12]. - Emerging applications in robotics, agentic AI, and autonomous systems present additional market opportunities that are not fully accounted for in current forecasts [16]. - Nvidia's fabrication partner, Taiwan Semiconductor Manufacturing, is expanding production capacity, which should help alleviate supply chain issues and support Nvidia's growth [17].

Core Insights - Nvidia CEO Jensen Huang announced that the company has $500 billion in orders for its chips in 2025 and 2026, indicating strong confidence in continued growth in the AI sector [1][2] - The significant increase in quarterly revenue, nearly 600% over the past four years, suggests that Nvidia is poised for another strong year, albeit with a slowing growth rate [1] - Analysts believe that Nvidia's disclosures indicate a potential upside to current revenue estimates, particularly for data center sales, which could reach $60 billion above previous 2026 estimates [3] Financial Performance - Analysts expect Nvidia to report earnings of $1.25 per share on $54.83 billion in sales for the third quarter, reflecting a 56% year-over-year increase [5] - Guidance for the January quarter is anticipated to be $61.88 billion, suggesting a re-acceleration of growth [5] - Current consensus estimates for Nvidia's sales in 2026 stand at $285 billion, which will be closely monitored during the upcoming earnings report [6] Market Sentiment - There is ongoing debate among investors regarding the sustainability of the AI boom and whether major cloud companies and AI labs are overspending on infrastructure [4] - Despite the positive outlook from Huang, Nvidia's stock is currently trading 5% lower than its value when the optimistic forecast was made on October 28 [3]

Core Viewpoint - Nvidia is poised to achieve record data center revenue, driven by high demand for its GPUs and a significant order backlog of $500 billion for new chips over the next five quarters [1][6][12] Group 1: Financial Outlook - Nvidia's CEO Jensen Huang announced a $500 billion order book for the new Blackwell and Rubin GPUs, indicating strong future revenue potential [5][6] - The actual backlog figure is estimated to be closer to $307 billion, which is expected to be recognized over the next year [11] - Nvidia's data center division is now generating more than $30 billion in revenue quarterly, showcasing substantial growth compared to previous years [12][13] Group 2: Market Reaction - Following the announcement of the order backlog, Nvidia's market capitalization surged to over $5 trillion [6] - Investors are optimistic about Nvidia's growth trajectory, which is expected to exceed Wall Street's current expectations [14][16] Group 3: Product Demand and Development - The demand for Nvidia's GPUs has created a virtuous cycle of sales and reinvestment into developing more powerful architectures [3][10] - Approximately 30% of the demand for Blackwell chips relates to units already shipped, meaning some revenue has already been recognized [10] Group 4: Investment Perspective - Nvidia's forward price-to-earnings (P/E) ratio of 30 is considered reasonable given its robust sales pipeline and expanding profitability [16] - Nvidia is viewed as a compelling buy-and-hold opportunity for technology investors, suitable for long-term portfolios [17]

Investment Overview - NVIDIA plans to invest up to $100 billion in OpenAI, expecting to generate $35 billion in annual revenue from this partnership[3] - Each 1 Gigawatt (GW) of data center (DC) deployment corresponds to approximately $50 billion investment and is projected to yield around $35 billion in NVIDIA content[3] Financial Projections - Revenue for CY26 has been revised up by 12% to $324 billion, reflecting the anticipated revenue from the OpenAI partnership[3] - Estimated earnings per share (EPS) for CY25 and CY26 are projected to be $4.9 and $7.5 respectively, leading to a target price of $225 based on a 30x price-to-earnings (PE) ratio for 2026[3] Revenue and Profit Growth - FY24A revenue is reported at $130.5 billion, with a year-over-year (YoY) growth of 114%[4] - FY25A revenue is projected at $217.2 billion, with a YoY growth of 66%[4] - FY26E revenue is expected to reach $324.1 billion, reflecting a 49% YoY growth[4] Profitability Metrics - Net income for FY24A is $74.2 billion, with a YoY growth of 130%[4] - FY25A net income is estimated at $120.2 billion, with a YoY growth of 62%[4] - FY26E net income is projected to be $183.1 billion, corresponding to a 52% YoY growth[4] Risk Factors - Potential risks include lower-than-expected AI demand, supply chain disruptions, and geopolitical uncertainties[4]