Nvidia’s (NVDA) ultra-bullish trend in the first half of the year has stalled, with the stock failing to reach new highs in recent months. After the much-anticipated Q2 earnings report in late August, Nvidia shares experienced a pullback due to high investor expectations for hypergrowth, despite posting strong results. I believe this price correction presents an interesting opportunity. In this article, I will outline five reasons for a bullish view on Nvidia, focusing on strong revenue growth (despite tough comps), AI dominance, valuation, technical indicators, and Wall Street analyst consensus.
Let’s dive in.
1. Nvidia’s Strong Revenue Growth Despite Difficult Comparisons
The first point that supports the long bullish thesis for Nvidia is the solid revenue growth shown in Q2 results, despite challenging comparisons.
Nvidia posted 122% year-over-year growth in its most recent quarter, reaching $30 billion in revenue—a remarkable achievement given the company’s already growing revenue base. Although this growth rate is lower than the 200% surge from the previous quarter, absolute triple-digit top-line growth remains impressive. This underscores Nvidia’s ability to significantly expand revenue even when set against previous performance.
While the post-Q2 stock pullback may be due to expectations being set too high, it’s important to note that Nvidia continues to post consecutive quarterly earnings, signaling strong demand for its products, particularly in AI and data centers. The continued growth rate at such a large scale highlights Nvidia’s capacity to capture market share and drive long-term revenue expansion. Nvidia’s Q3 sales guidance of $32.5 billion further reflects the company’s confidence in maintaining its growth trajectory.
2. Nvidia’s dominance in the AI ​​and Data Center market
The second bullish point is Nvidia’s continued dominance in the data center GPU space, where it has a 98% market share in this fast-growing sector, according to HPCwire.
The demand for AI-driven solutions is growing in industry, with Nvidia’s H100 Hopper GPU becoming essential for enterprise cloud applications that require a lot of computing power. Beyond hardware, Nvidia dominates AI through its software ecosystem, including CUDA and cuDNN, offering comprehensive AI solutions. As highlighted in Nvidia’s earnings call, the company aims to transform the $1 trillion data center market by shifting from traditional computing to high-speed computing using advanced data processing libraries.
Going forward, Nvidia plans to launch its Blackwell architecture in Q4 Fiscal 2025, offering greater power and efficiency than Hopper. Designed to meet the demands of hyperscalers and AI developers, Blackwell will provide a complete solution, including chips, systems, networks, and software. This release is a key catalyst that will solidify Nvidia’s leadership in AI.
3. Nvidia Looks Attractively Priced While Adjusted for Growth
The third point concerns Nvidia’s valuation. At first glance, the P/E ratio of 54.7x and forward P/E of 42.5x may seem high, especially compared to the semiconductor industry average of 23.7x. However, my bullish stance is strengthened by Nvidia’s growth prospects, with the company expected to achieve 106% revenue growth and 119% EPS growth this year.
Furthermore, analysts expect Nvidia’s EPS to grow at a CAGR of 36.6% over the next three to five years. This impressive growth rate, combined with the current forward P/E, results in a reasonable forward price-to-earnings-to-growth (PEG) ratio of 1.16.
Typically, undervalued stocks have a PEG ratio below one, but NVIDIA’s PEG ratio is better than all other Magnificent 7 stocks. Among this group, Alphabet (GOOGL) and Meta (META) have the lowest PEG ratios at 1.28 and 1.48, respectively. While this doesn’t mean NVIDIA is undervalued compared to its Big Tech peers, it does show that, by this metric, the stock doesn’t look too expensive.
4. NVDA Moving Averages Suggest a Bullish Trend
A fourth point that reinforces the bullish thesis is related to sentiment about the performance of Nvidia shares. Despite recent fluctuations, the company’s triple-digit revenue growth indicates that it is still in the hypergrowth phase. However, with the share price soaring 2,700% over the past five years, concerns about a potential bubble remain.
In this context, I believe that focusing on long-term moving averages is important for measuring momentum. This provides a clearer view of Nvidia’s trends amid daily volatility, especially given the stock’s 48% annualized volatility. The change in NVDA stock price for today is $92.80.
5. Wall Street remains Bullish on NVDA
Finally, the fifth point that contributes to the favorable outlook for Nvidia is the overwhelming consensus among Wall Street analysts. Of the 42 analysts covering the stock, 39 have issued a Buy recommendation, while the remaining three have a Hold rating. Additionally, the average price target among these analysts is $152.44, indicating a potential upside of about 25%.
A standout Rosenblatt analyst Hans Mosesmann, who has the highest price target on Wall Street for Nvidia at $200 per share. His optimism remained after Q2 results, which he considered strong, driven by growth in Hopper AI and networks. Although the gross profit dipped slightly due to the update of Chips Blackwell aimed at improving the results, Mosesmann remains confident. He highlighted that despite short-term weakness in share prices, bullish sentiment is supported by a P/E multiple of 44x based on Fiscal 2027 EPS.
Conclusion
In this article, I have outlined five key points that support a Buy stance on Nvidia. I believe that this recent stock weakness presents an attractive buying opportunity for investors looking to pursue a strong growth trajectory.
While some short-term hiccups may remain, Nvidia’s Q2 results show that its growth story will continue as the company consolidates its market dominance and prepares for the upcoming release of the Blackwell architecture. Given the potential for further growth in the coming years, the current rich price can be justified, and Wall Street believes the same.
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