NVIDIA Jumps 70% Over the Past Year: Can the Stock Continue Its Upward Trend?

NVIDIA's Exceptional Stock Performance

Over the past year, NVIDIA Corporation (NVDA) has seen its share price surge by 67.3%, outpacing the broader semiconductor sector, which rose 59.2%. NVIDIA’s performance has also exceeded that of other leading semiconductor firms such as QUALCOMM (QCOM), STMicroelectronics (STM), and Texas Instruments (TXN). In the last twelve months, STMicroelectronics and Texas Instruments recorded gains of 34.5% and 10.4% respectively, while QUALCOMM’s shares fell by 9.8%.

One-Year Return Comparison

Source: Zacks Investment Research

NVIDIA has greatly benefited from the rapid expansion of artificial intelligence (AI), fueling strong demand for its GPUs and computing products. As the need for AI and high-performance computing hardware continues to grow, NVIDIA is well-positioned to capitalize on these trends, making its stock an attractive investment opportunity.

Data Center Segment Drives Growth

The Data Center division remains NVIDIA’s primary growth driver. In the fourth quarter of fiscal 2026, this segment generated $62.31 billion in revenue, accounting for 91.5% of the company’s total sales. This represented a remarkable 75% increase compared to the previous year and a 22% rise from the prior quarter.

The impressive results were largely due to increased shipments of the Blackwell GPU computing platforms, which are essential for training and running large language models, recommendation systems, and generative AI applications.

Demand for Blackwell GPUs has been a significant growth catalyst, as cloud service providers and enterprises expand their AI infrastructure. The majority of Data Center revenue came from large cloud providers, highlighting ongoing investments in AI-powered computing.

With AI adoption accelerating across various industries, NVIDIA’s dominance in the data center market positions it as a major beneficiary. Its leadership in AI chip innovation supports continued revenue expansion in this segment.

Strong Financial Results

Despite global economic uncertainties and geopolitical tensions, NVIDIA’s financial performance remains robust. In the fourth quarter of fiscal 2026, revenue increased by 73% year-over-year, and non-GAAP earnings per share climbed 82%.

The company anticipates a positive outlook for the first quarter of fiscal 2027, projecting a 77% year-over-year revenue increase to $78 billion, driven by ongoing AI-related demand. NVIDIA expects a strong non-GAAP gross margin of 75%, up 370 basis points from the previous year’s 71.3% (excluding H20 charge).

Analyst consensus estimates for fiscal 2027 and 2028 indicate continued momentum for both revenue and earnings growth.

Source: Zacks Investment Research

NVIDIA’s cash flow remains healthy, generating $36.19 billion in free cash flow during the fiscal fourth quarter and $102.72 billion for fiscal 2026. The company finished the quarter with $62.6 billion in cash, cash equivalents, and marketable securities, up from $60.6 billion in the prior quarter.

This strong liquidity enables NVIDIA to invest in research and development, expand manufacturing, and return capital to shareholders. In the fourth quarter, NVIDIA distributed $243 million in dividends and repurchased $3.82 billion worth of shares. For fiscal 2026, dividend payments totaled $974 million, and share buybacks reached $40.09 billion.

Attractive Valuation Supports Investment

Despite its impressive rally, NVIDIA’s stock remains reasonably valued. It trades at a forward 12-month price-to-earnings (P/E) ratio of 22.73X, which is below the industry average of 24.5X.

Forward P/E Ratio Comparison

Source: Zacks Investment Research

Among its peers, NVIDIA’s P/E ratio is higher than QUALCOMM’s but lower than STMicroelectronics and Texas Instruments. Currently, QUALCOMM trades at 11.99X, STMicroelectronics at 26.08X, and Texas Instruments at 29.22X.

Investment Outlook: NVIDIA Remains a Strong Choice

NVIDIA’s solid fundamentals, leadership in AI, and promising growth prospects make it a compelling investment. Its reasonable valuation further supports buying the stock.

At present, NVIDIA holds a Zacks Rank #2 (Buy). For a full list of Zacks #1 Rank (Strong Buy) stocks, click here.

AI's Next Wave: Opportunities Beyond NVIDIA

The AI boom has already created significant wealth, but the best returns may come from lesser-known companies tackling major global challenges. These emerging AI firms could offer substantial profit potential in the near future.

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