NVIDIA Soars 27% in Six Months: Is the Stock Still Worth Buying?

NVIDIA Corporation NVDA shares have rallied 27.4% in the past six months, outperforming the broader Zacks Semiconductor – General industry’s rise of 25.1%. The stock has been a key beneficiary of the artificial intelligence (AI) boom, which has driven strong demand for its graphics processing units (GPUs) and computing solutions.

It has even outpaced major semiconductor companies, including QUALCOMM QCOM, STMicroelectronics STM and Texas Instruments TXN. QUALCOMM stock has gained 12.6% over the past six months, while shares of STMicroelectronics and Texas Instruments have fallen 9.8% and 10.6%, respectively.

NVIDIA 6-Month Price Return Performance

This outperformance shows investors are becoming increasingly confident in NVIDIA’s long-term prospects, even in a volatile market shaped by trade conflicts and geopolitical risks. We believe this momentum is grounded in strong fundamentals, and NVDA’s long-term outlook justifies a buy position for now.

Data Center: NVIDIA’s Key Growth Catalyst

NVIDIA’s most powerful growth engine continues to be its Data Center business. In the third quarter of fiscal 2026, the segment generated $51.22 billion in revenues, representing 89.8% of total sales. This marked a staggering 66% year-over-year increase and 25% sequential growth.

The robust performance was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications.

The demand for NVIDIA’s Hopper 200 and Blackwell GPU computing platforms has been a key catalyst as cloud providers and enterprises scale their AI infrastructure. Large cloud service providers contributed to the majority of Data Center revenues, indicating continued hyperscale investment in AI-driven computing.

With AI adoption accelerating across industries, NVIDIA's stronghold in data centers makes it a critical beneficiary of this trend. The company’s leadership in AI chip development positions it well for sustained revenue growth in this segment.

NVIDIA’s Strong Financial Performance

Despite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, NVIDIA’s financials remain rock solid. In the third quarter of fiscal 2026, revenues jumped 62% from the year-ago quarter, while non-GAAP earnings per share rose 60%.

NVIDIA’s outlook for the fourth quarter of fiscal 2026 remains upbeat. The company expects fourth-quarter revenues to increase 66% year over year to $65 billion, reflecting continued momentum in AI-driven demand. The gross margin is expected to be strong at 75%, indicating a 150-basis-point improvement from the year-ago quarter.

The Zacks Consensus Estimate for fiscal 2026 and 2027 suggests continued growth momentum for the company’s top and bottom lines.

NVIDIA’s cash flow generation also remains robust. It generated a free cash flow of $23.75 billion in the fiscal third quarter and $66.53 billion in the first three quarters of fiscal 2026. The company ended the fiscal third quarter with $60.6 billion in cash, cash equivalents and marketable securities, up from $56.8 billion in the previous quarter.

This strong liquidity position enables NVIDIA to reinvest in research and development, expand manufacturing capabilities and return capital to shareholders. In the fiscal third quarter, the company returned $243 million to its shareholders through dividend payouts and repurchased stocks worth $12.46 billion. In the first three quarters of fiscal 2026, NVIDIA paid out $732 million in dividends and bought back shares worth $36.27 billion.

Discounted Valuation Justifies Buying NVIDIA Stock

Despite the rally, NVIDIA stock trades at a reasonable valuation multiple. It trades at a forward 12-month price-to-earnings (P/E) of 27.26X compared with the industry average of 29.03X.

NVIDIA Forward 12-Month P/E Ratio

Compared to other semiconductor peers, NVIDIA has a higher P/E multiple than QUALCOMM and STMicroelectronics but a lower multiple than Texas Instruments. Currently, QUALCOMM, STMicroelectronics and Texas Instruments trade at P/E of 13.74X, 22.78X and 28.39X, respectively.

Conclusion: Buy NVDA Stock for Now

NVIDIA’s strong fundamentals, dominant position in AI and impressive growth outlook make a compelling case for staying invested. The company’s reasonable valuations support buying the stock.

NVIDIA sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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