A 24% rally in the last one month meant that Nvidia closed Tuesday’s trading session with a market capitalisation of $3.45 trillion, higher than Microsoft’s $3.44 trillion.
Nvidia has defied export controls and tariff concerns by continuing to maintain its growth trajectory.
For the most recent quarter, Nvidia reported a 69% growth in its topline to $44.06 billion, and Earnings Per Share (EPS) of $0.96, fuelled by its AI chips used by companies including OpenAI. Both these figures were higher than analyst expectations.
Nvidia’s recovery and subsequent upmove over the last two months has added $1 trillion to its market capitalisation.
Last week’s earnings report assuaged some key investor concerns: particularly whether US restrictions on the sales of advanced semiconductors in China would derail Nvidia’s rapid revenue growth as well as the outlook for artificial intelligence spending, and the firm’s ability to expand supply of its newest Blackwell chips.
“Those questions have been answered in the positive for Nvidia,” said Thomas Martin, senior portfolio manager at Globalt Investments. “It’s time to ramp back up your ownership.”
Despite the big advance, Nvidia trades at roughly 29 times profits projected over the next 12 months, well below the average over the past decade at 34 times. By contrast, the Nasdaq 100 is priced at 26 times despite Wall Street estimates calling for revenue growth this year that’s a fraction of Nvidia’s.
The stock’s PEG ratio — a measure of valuation relative to growth — is under 0.9, the lowest among the Magnificent Seven, which also includes Apple Inc., Amazon.com Inc., Alphabet Inc., Tesla Inc. and Meta Platforms Inc.
China accounted for 13% of Nvidia’s topline in the most recent quarter and any deterioration in the tariff talks with the US still puts the company at risk. However, some of those risks are being offset by purchase agreements it has signed with Middle eastern countries, during US President Donald Trump’s visit.
“We just haven’t seen any kind of slowdown in AI spending, and so long as capex keeps moving up, we’re unlikely to see the cycle roll over or Nvidia experience much compression to its multiple,” said Samuel Rines, a macro strategist at WisdomTree.
Microsoft, Meta, Alphabet, and Amazon, which together comprise more than 40% of Nvidia’s revenue, continue to invest aggressively in AI infrastructure. Capital expenditures for the four companies are projected to reach roughly $330 billion in 2026, up 6% from estimated spending this year, according to the average of analyst estimates compiled by Bloomberg.
(With Inputs From Agencies.)
