Think Nvidia Is Expensive? These 3 Charts Might Change Your Mind

Investors often question whether NVIDIA (NASDAQ: NVDA) is overvalued, given its soaring stock price and aggressive growth narrative. With shares trading near $115 post-split—a sharp decline from its 2024 peak but still elevated by historical standards—many argue the AI chip giant has priced in too much optimism. But dig deeper into the data, and a compelling case emerges: NVIDIA’s valuation may still be justified by its dominance in the AI revolution, margin resilience, and long-term growth tailwinds. Let’s unpack three charts that could shift your perspective.

Chart 1: Revenue Growth That Defies Gravity

NVIDIA’s financials speak to its stratospheric rise. In Q1 FY2025 (ended April 2024), revenue hit $26.0 billion, up 262% year-over-year. The data center segment—powered by AI training and inference demand—accounted for $22.6 billion, a staggering 427% YoY jump. This isn’t just a short-term surge; it’s a structural shift. The “Magnificent Seven” tech giants (Meta, Microsoft, Amazon, etc.) are building AI empires, and NVIDIA’s Hopper GPUs and Blackwell platform are the infrastructure of choice.

Analysts estimate NVIDIA’s AI-related revenue could hit $100 billion annually by 2030, per management guidance. Even at its current P/E of 37x, that growth trajectory suggests the stock isn’t overvalued—unless you believe AI adoption will collapse overnight.

Chart 2: Gross Margins Hold Steady Amid Expansion

Skeptics often point to margin pressures as a red flag. NVIDIA’s Q4 FY2025 GAAP gross margin dipped to 73.0%, down from 78.9% in Q1, but this reflects strategic investments in AI infrastructure. The Blackwell platform, for instance, requires advanced silicon and software integration, which temporarily weigh on margins. However, the long-term payoff is clear:

NVIDIA’s margins remain 20+ percentage points higher than competitors like AMD (53% margins) or Intel (50%), thanks to its AI-focused R&D and economies of scale. CEO Jensen Huang has repeatedly stated that AI’s “physical and agentic” future will require NVIDIA’s compute power, not just for training but for real-time inference in robotics, healthcare, and autonomous vehicles.

Chart 3: Analyst Targets and Valuation Multiples Suggest Upside

Despite fears of overvaluation, the analyst community remains bullish. The consensus price target of $163 (as of May 2025) implies 42% upside from current levels. Even cautious estimates, like HSBC’s $185 target by 2026, factor in geopolitical risks without pricing in a worst-case scenario.

Critics argue NVIDIA’s 37x P/E is too high, but this multiple is justified by its 65% YoY revenue growth and the sheer scale of AI’s addressable market. The global AI chip market is projected to hit $300 billion by 2030, and NVIDIA controls ~80% of the high-end GPU market. Competitors like AMD and Intel are playing catch-up, not stealing share.

Conclusion: The AI Leader’s Case for Further Growth

NVIDIA isn’t cheap, but its valuation isn’t irrational either. The data shows three critical pillars:
1. Revenue Growth: AI is driving a $26 billion run rate in data center sales, with no end in sight.
2. Margin Resilience: Even with R&D investments, NVIDIA’s margins outpace peers by wide margins.
3. Analyst Consensus: Bulls outnumber bears, and targets imply sustained outperformance.

Yes, risks exist—geopolitical tensions, competition, and valuation sensitivity. Yet NVIDIA’s lead in AI supercomputing (via Blackwell) and its $500 billion Stargate Project partnership with the U.S. government underscore its irreplaceable role. At $115, the stock trades at 26x forward earnings, a premium but not unreasonable given its growth profile. If you believe AI isn’t a fad but the next computing paradigm, NVIDIA’s valuation may still be a bargain.

The charts tell a story: NVIDIA’s stock isn’t overpriced—it’s priced for the future.