When assessing the leaders of the artificial intelligence (AI) boom, Nvidia Corporation (NVDA) continues to be the most challenging stock for investors to bet against. Wolfe Research, an independent equity research firm, has reinforced this view by selecting Nvidia as its top AI semiconductor pick ahead of the company’s upcoming earnings report.
Analyst Chris Caso remains “broadly bullish” on AI semiconductor stocks, particularly as major technology companies continue to commit enormous amounts of capital to AI infrastructure. The firm said the broader AI semiconductor backdrop remains strong, pointing to upward revisions in capital expenditure and supportive supply-chain data as signs that spending on AI infrastructure is still accelerating.
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Wolfe also pointed to significant financing deals with Nvidia and Broadcom (AVGO) as proof that companies are finding ways to fund these large-scale projects. While Nvidia taking on some financing exposure introduces an element of risk, the firm believes the additional demand generated by these investments could ultimately be more significant than the market currently expects.
Importantly, Wolfe’s bullish thesis extends beyond Nvidia’s next quarterly results. The company’s longer-term earnings potential could be the more important driver, with demand for offerings expected to remain strong.
About Nvidia Stock
Headquartered in Santa Clara, California, Nvidia develops GPUs, networking hardware and software for AI, data centers, gaming, and automotive applications. The company carries a market cap of nearly $5.2 trillion, with accelerated computing and AI infrastructure forming the heart of its business through chips and systems that train and run AI models.
Nvidia also supplies graphics processors for gaming and professional workstations, giving the company exposure beyond the AI frenzy. Nevertheless, resilient AI chip demand combined with expanding data center investments has translated into strong stock performance, with shares gaining 17.7% over the past 52 weeks and climbing 12.3% in the last six months.
www.barchart.com On the valuation front, shares are currently trading at 23.83 times forward adjusted price-to-earnings and 13.15 times sales, leaving both measures above industry averages. However, the numbers sit below their own five-year historical averages, potentially offering long-term investors a wise entry point.
The tech pioneer also pays an annual dividend of $1 per share, producing a 0.46% yield at current levels. It paid its most recent dividend of $0.25 per share on June 26 to shareholders of record as of June 4.
Nvidia Surpasses Q1 Earnings
Nvidia's Q1 FY2027 results, released May 20, blew past expectations and reinforced its dominance in the AI computing race. Revenue surged 85.2% year-over-year (YOY) to $81.6 billion, ahead of the Street’s $78.8 billion forecast. Adjusted EPS reached $1.87, up 139.7% from the year-ago value and came in higher than the $1.76 analysts were anticipating.
Data Center was once again the growth engine, with revenue up 92.4% YOY to $75.2 billion, fueled by the ramp of Blackwell systems across hyperscalers, AI clouds, and sovereign customers. Nvidia’s newly introduced reporting framework also showed demand spreading across a wider customer base.
Hyperscale revenue climbed 115.2% YOY, while AI Clouds, Industrial & Enterprise (ACIE) revenue increased 73.7% YOY. Edge Computing, the smaller segment covering PCs, robotics, and automotive, grew a comparatively modest 28.7% YOY to $6.4 billion.
Non-GAAP gross margin expanded to 75%, rising 14.2 points YOY as last year’s H20 inventory charge rolled off. Non-GAAP operating income more than doubled, climbing 146.7% YOY to $53.8 billion. Whereas non-GAAP net income followed with a 138.5% YOY increase to $45.5 billion.
On the balance sheet, free cash flow came in at $48.6 billion, up sharply from a year ago, giving Nvidia room to return roughly $20 billion to shareholders in the quarter. And, the board raised the quarterly dividend to $0.25 per share and approved an additional $80 billion in buybacks.
Looking ahead, management expects Q2 FY2027 revenue to be $91.0 billion, plus or minus 2%. Non-GAAP gross margin is expected to be 75.0%, plus or minus 50 basis points. Meanwhile, non-GAAP operating expenses are expected to be approximately $8.3 billion.
The company is scheduled to report its Q2 FY2027 earnings on Wednesday, Aug. 26, after markets close. Analysts expect Q2 EPS to grow 111.1% YOY to $2.09. Full-year FY2027 EPS estimates sit at $8.80, implying 92.6% annual growth, while FY2028 estimates are projected to reach $12.59, adding another 43.1% growth.
What Do Analysts Expect for Nvidia Stock?
Wall Street has assigned NVDA stock an overall “Strong Buy” rating, reflecting broad optimism among analysts covering the company. Among 48 analysts covering the stock, 44 rate Nvidia a "Strong Buy," three give it a "Moderate Buy," while one flags a "Strong Sell."
To that end, the average price target of $306.22 represents potential upside of 46.3%. Meanwhile, the Street-High target of $500 points to a gain of 138.8% from current levels.
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www.barchart.com On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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