Key Takeaways NVDA posted 62% sales growth in fiscal Q3 2026, driven by explosive AI data center demand and GPU adoption.AMAT gains from foundry, DRAM and HBM demand but faces China restrictions and slower ICAPS growth.NVDA offers stronger growth visibility than AMAT, despite both trading at almost similar P/E levels.NVIDIA Corporation (NVDA) and Applied Materials, Inc. (AMAT) are two of the most important players riding on the global semiconductor and artificial intelligence (AI) boom. NVIDIA dominates the ...

Core Viewpoint - NVIDIA Corporation (NVDA) has experienced a significant stock decline of nearly 19.6% year to date, influenced by broader market sell-offs and trade war concerns, but the long-term outlook remains strong due to its leadership in the semiconductor industry [1][4]. Company Performance - Despite the recent market turbulence, NVIDIA's core business fundamentals are robust, maintaining its position as a leader in AI chips, data centers, gaming, and autonomous vehicles [6]. - In the fourth quarter of fiscal 2025, NVIDIA's revenues surged by 78% year over year, with non-GAAP EPS climbing by 71% [8]. - The company's first-quarter fiscal 2026 guidance projects revenues of $43 billion, a substantial increase from $26.04 billion in the prior-year quarter [8]. Market Position - NVIDIA's data center segment is a key growth driver, with AI-driven workloads and cloud computing expansion making its high-performance chips essential for businesses investing in AI infrastructure [7]. - Analysts forecast revenue growth of 52% for fiscal 2026 and 23% for fiscal 2027, with earnings projected to rise by 47% and 24%, respectively [9]. Technological Advancements - The company is set to launch its Blackwell Ultra and Vera Rubin platforms, which are expected to enhance its position as a leading AI infrastructure provider [12]. - NVIDIA's Blackwell architecture is anticipated to deliver up to 25 times the token throughput of its predecessor, driving the next wave of AI adoption [11]. Valuation and Investment Opportunity - The recent decline in NVDA shares has created an attractive entry point, with the stock trading at a trailing 12-month P/E ratio of 23.65, below the industry average of 26.34 [13]. - While NVIDIA commands a premium over some semiconductor companies, its valuation is justified by its superior growth trajectory and market leadership in AI and high-performance computing [16][17]. - Market corrections present opportunities for long-term investors, and NVIDIA's recent dip is viewed as a favorable moment to invest in a company shaping the future of AI and cloud computing [18][19].

Core Insights - NVIDIA Corporation has reported impressive fourth-quarter fiscal 2025 earnings, with revenues of $39.33 billion, a 78% year-over-year increase, exceeding consensus estimates of $37.72 billion [1] - The company's Data Center segment is a significant growth driver, generating $35.58 billion in revenues, accounting for 90.5% of total sales, and reflecting a 93% year-over-year increase [3][4] - NVIDIA's strong financial performance is supported by high gross margins of 73.5% and a non-GAAP operating income of $25.52 billion, up 73% year-over-year [6] Data Center Segment - The Data Center business is crucial for NVIDIA's financial strength, with a 93% year-over-year revenue increase driven by AI workload adoption [3][5] - Large cloud service providers contributed nearly 50% of Data Center revenues, indicating robust investment in AI infrastructure [4] - The demand for NVIDIA's Hopper 200 and Blackwell GPU platforms is a key factor in this growth [4] Financial Performance - NVIDIA reported non-GAAP gross margins of 73.5%, showcasing strong profitability despite rising operational costs [6] - The company ended the fourth quarter with $43.2 billion in cash and marketable securities, up from $38.4 billion in the previous quarter, allowing for reinvestment and shareholder returns [7] AI Momentum - The company is positioned to benefit from the accelerating adoption of AI across various industries, with a focus on reasoning AI models requiring higher computational power [8] - Upcoming launches of the Blackwell Ultra and Vera Rubin platforms are expected to enhance NVIDIA's technological advantage [9] - NVIDIA's diversification into emerging AI applications, such as enterprise AI and autonomous vehicles, supports long-term growth potential [11] Future Guidance - For the first quarter of fiscal 2026, NVIDIA projects revenues of $43 billion, indicating continued momentum in AI demand, with gross margins expected to remain strong at 71% [10] - The Zacks Consensus Estimate for first-quarter revenues is $43.28 billion, reflecting a 66.2% year-over-year growth [12] Stock Valuation - Despite strong fundamentals, NVIDIA shares have declined 14.6% year-to-date due to broader market volatility, presenting a potential buying opportunity [13][16] - The stock trades at a trailing 12-month P/E ratio of 26.29, below the industry average of 28.42, indicating a relative discount [16] Conclusion - NVIDIA's strong fourth-quarter results and optimistic outlook for fiscal 2026 reinforce its leadership in AI-driven computing and data center markets, making it a compelling investment opportunity [19]