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Chicago, IL – March 2, 2026 – Today, Zacks Investment Ideas feature highlights Nvidia NVDA, Amazon AMZN, Alphabet GOOGL, Microsoft MSFT, Oracle ORCL, Alibaba BABA and AMD AMD.
Despite posting blowout quarterly results as usual, Nvidia stock is now down over 6% since its Q4 report on Wednesday.
This comes as the chip giant’s Q4 sales of $68.12 billion and EPS of $1.62 stretched 73% and 82% year over year, respectively, and represented significant sequential growth as well.
Still, the stellar results didn't calm deeper investor concerns about the sustainability of the AI boom, concentration risks, and future growth, although Nvidia impressively surpassed Wall Street’s expectations.
Notably, a recurring theme across analyst commentary is skepticism about how long hyperscalers can keep spending tens of billions on AI infrastructure.
Others question whether AI monetization is happening fast enough to justify the spending, and the shift in sentiment is weighing on Nvidia because it’s the primary beneficiary of that spending.
Furthermore, 90% of Nvidia’s revenue now comes from data centers, and much of that is just from five major cloud providers, which include Amazon, Alphabet, Microsoft, Oracle and Alibaba. That level of dependency raises questions about what happens if even one of those customers slows orders.
Investors are also increasingly concerned about competition from AMD, and that hyperscalers are working on their own in-house AI accelerators, with an emphasis on Alphabet and Amazon building out custom AI chips, with others likely to eventually follow suit.
In other words, even if Nvidia remains dominant, the fear is that margins or growth rates could eventually compress.
While Nvidia didn’t provide CapEx or EPS guidance, which is consistent with its long-standing practice of typically only providing revenue guidance, its top-line forecast reassuringly beat Wall Street’s expectations.
For its current fiscal 2027, Nvidia issued Q1 revenue guidance of $78B plus or minus 2%, which came in pleasantly above analysts’ expectations of about $72.8B and would equate to at least 73% YoY growth and 12% sequentially.
Following Nvidia’s stellar Q4 results and positive guidance, EPS estimates for its FY27 and FY28 have trended over 3% higher in the last week.
In the last 90 days, these revisions have risen roughly 7% respectively. Nvidia’s annual earnings are now expected to leap 60% in FY27 and are projected to increase another 20% in FY28 to $9.13 per share.
More astonishing, the year-ago EPS estimates picture shows that Nvidia’s FY27 and FY28 revisions have climbed over 40%.
Further encouraging is that Nvidia is trading near its cheapest forward P/E valuation in a decade, offering a noticeable discount to its median of 45X during this period, and well below highs of 118X.
It’s noteworthy that NVDA is only trading at a slight premium to the benchmark S&P 500 and is beneath its Zacks Semiconductor-General Industry average of 27X.
Even with AI sustainability concerns looming, it doesn’t look like the time to count Nvidia out.
Ultimately, investors shouldn’t dismiss Nvidia despite rising concerns about the long-term sustainability of AI spending because the company continues to demonstrate overwhelming demand, structural dominance, and is the leader in a revolutionary technology — factors that outweigh near-term worries about energy use, customer concentration, or a potential AI spending plateau.
Based on a very positive trend of EPS revisions, Nvidia stock currently sports a Zacks Rank #1 (Strong Buy).
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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This article originally published on Zacks Investment Research (zacks.com).
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