Quick Read
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NVDA shares dropped 13% over the past month while revenue surged 106% YoY, leaving shares trading at just 13x fiscal 2028 earnings consensus.
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AMD trades at 29x 2027 earnings with a 49.5% gross margin versus NVDA’s 13x multiple and 71% gross margin, making NVDA the cheaper, stronger business.
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My NVIDIA (NASDAQ:NVDA) position grew again this month, and every pullback gets me to the buy button faster. Shares sit at $202.06. They fell 13.63% over the past month and gained only 0.03% over the past year, while revenue roughly doubled. I keep buying because the stock and the business have diverged.
Why I Keep Coming Back to NVIDIA
NVIDIA sells the whole AI toolkit: chips, networking, CUDA software and full systems. The biggest AI buyers keep signing on for multiple product generations. OpenAI committed to 10+ gigawatts of NVIDIA systems, Anthropic is taking up 1GW, and Meta Platforms (NASDAQ:META) signed a multi-year, multi-generation agreement. To me, that makes NVIDIA a toll road I want to own for decades.
Three Receipts Behind My Conviction
First, the earnings keep beating estimates. Q2 fiscal 2027 revenue reached $96.22 billion, up 105.8% YoY. Non-GAAP EPS came in at $2.22 vs. the $2.09 consensus, the 5th consecutive beat. Management guided Q3 revenue to $108.0 billion, plus or minus 2%.
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Second, the valuation got cheaper while profits rose. Based on the current price, I pay about 22 times the fiscal 2027 EPS consensus of $9.3124 and about 13 times the fiscal 2028 consensus of $15.9146. Ninety days ago, that fiscal 2028 estimate stood at $12.8148. Over the past 30 days, analysts made 7 upward revisions and zero downward ones. The revenue consensus implies about 68% growth from fiscal 2027 to fiscal 2028.
Third, the business funds itself. Return on invested capital runs at 92.2%, debt-to-equity stands at 0.073, and interest coverage reaches 503.4x. NVIDIA returned about $26.0 billion to shareholders in Q2 alone and has roughly $99.0 billion left on its buyback authorization. It also raised its quarterly dividend to $0.25 from $0.01. The yield is small. Still, for retirement money, I want a company that grows equity this efficiently.
