NVIDIA Corporation (NVDA): A Bull Case Theory

We came across a bullish thesis on NVIDIA Corporation on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on NVDA. NVIDIA Corporation's share was trading at $170.78 as of September 2^nd. NVDA’s trailing and forward P/E were 48.66 and 38.02 respectively according to Yahoo Finance.

NVIDIA delivered another record quarter with revenue of $46.7 billion, up 56% year over year and 6% sequentially, beating estimates by 2.7%. EPS came in at $1.05, exceeding expectations by 5%. Growth was fueled primarily by the Data Center segment, which generated $41.1 billion in revenue, up 56% on broad adoption of the Blackwell architecture. Automotive also posted strong momentum with $586 million in revenue, up 69%, driven by the Thor platform, while Gaming contributed $4.3 billion, up 49%, boosted by GeForce GPUs and the RTX 5060. Networking nearly doubled to $7.3 billion, with Spectrum X surpassing $10 billion in annualized revenue. Professional Visualization and OEM delivered smaller contributions, reflecting cyclical and low-base dynamics.

Geographically, U.S. revenue surged 80% to $23.5 billion, accounting for over half of total sales, while China declined 25% to $2.8 billion due to restrictions. Taiwan and other international markets grew solidly, reinforcing broad-based demand. Margins, while structurally strong, contracted modestly with GAAP gross margin at 72.4% and operating margin at 60.8%, both down year over year, as rising compute, infrastructure, and talent costs weighed. Free cash flow margin dropped to 28.8%. Nonetheless, shareholder returns were robust at $10 billion, and a new $60 billion repurchase authorization was announced.

Looking ahead, management guided Q3 revenue to $54 billion, again well above consensus, supported by accelerating Blackwell deployments, expanding networking demand, and early-stage enterprise AI adoption. While challenges remain around China restrictions and rising expenses, NVIDIA continues to dominate the AI infrastructure buildout, with growth drivers spanning sovereign AI, robotics, and enterprise workloads, positioning it as the backbone of the emerging industrial AI era.

Previously we covered a bullish thesis on NVIDIA Corporation (NVDA) by Compounding Your Wealth in April 2025, highlighting its AI dominance, CUDA ecosystem, and expanding TAM. The stock has appreciated about 54% since then as the thesis played out through strong Data Center growth and record earnings. The thesis still stands on NVIDIA’s durable moat. Sergey shares an identical view but emphasizes Blackwell-driven momentum.

NVIDIA Corporation is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 212 hedge fund portfolios held NVDA at the end of the first quarter which was 223 in the previous quarter. While we acknowledge the potential of NVDA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.