NVIDIA's Stock Surges 59% in Three Months: Is it Time to Hold or Exit?

NVIDIA's stock has surged 59.3% in three months, significantly outperforming the broader Zacks Computer and Technology sector. The stock's momentum is driven by strong fundamentals and a long-term outlook, fueled by its Data Center business and AI boom. Despite geopolitical setbacks, NVIDIA's financials remain solid, with a 69% revenue jump and 33% EPS rise in the first quarter of fiscal 2026. However, the company's premium valuation warrants caution, as it trades at a significant premium to its peers.

NVIDIA Corporation (NVDA) has seen its share price soar 59.3% over the past three months, significantly outperforming the broader Zacks Computer and Technology sector, which gained 22.7% during the same period [1]. The stock closed at $180.00 on Aug. 4, shy of its recently hit 52-week high of $183.30 on July 31, reflecting strong investor confidence in NVIDIA’s prospects.

The stock's remarkable performance can be attributed to its dominant position in the AI and data center markets. NVIDIA's Data Center business, which generated $39.1 billion in revenues in the first quarter of fiscal 2026, accounted for 89% of total company sales, representing 73% year-over-year growth and a 10% sequential rise. This growth is primarily driven by the explosive demand for AI, with the company's cutting-edge Hopper 200 and Blackwell GPU platforms being rapidly adopted by cloud and enterprise customers [1].

Despite geopolitical setbacks, NVIDIA's financials remain robust. In the first quarter of fiscal 2026, revenues jumped 69% from the year-ago quarter, while non-GAAP earnings per share rose 33%. Even with an $8 billion expected revenue hit in the second quarter due to export restrictions on its H20 chips in China, NVIDIA remains confident in its momentum. Its second-quarter guidance of $45 billion in revenues marks a 50% jump from the same quarter last year [1].

Wall Street analysts are optimistic about NVIDIA's long-term prospects. The Zacks Consensus Estimate projects revenue growth of 52% in fiscal 2026 and 25.9% in fiscal 2027, with earnings growth of 42.5% and 32.2%, respectively. These projections reinforce NVIDIA’s position as a long-term growth story, one that remains intact despite near-term geopolitical hurdles [1].

However, NVIDIA's premium valuation warrants caution. The stock trades at a forward 12-month Price/Earnings (P/E) ratio of 36.3X, higher than the sector’s 27.68X. Compared to other major semiconductor players, NVIDIA is trading at a lower P/E multiple than Broadcom but at a higher multiple than Marvell Technology and QUALCOMM [1].

In conclusion, while NVIDIA's strong fundamentals and dominant position in AI make a compelling case for staying invested, its premium valuation warrants caution. The company's momentum, both operationally and financially, supports holding the stock, but investors should monitor its valuation closely.

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/AVGO/pressreleases/33889258/nvidia-stock-jumps-59-in-three-months-time-to-hold-or-exit/