Shares of Nvidia (NASDAQ: NVDA) have appreciated 58% over the past year. While that’s an impressive jump, the stock’s returns fade in comparison to the 164% spike in the PHLX Semiconductor Sector index over the same period.
I think that the market hasn’t rewarded Nvidia stock enough for the outstanding growth it has been delivering quarter after quarter. The company’s latest quarterly report hasn’t done much to change its fortunes either, as the stock has slipped despite crushing Wall Street expectations when it released its fiscal 2027 first-quarter results (for the quarter ended April 26) on May 20.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
However, it won’t be long before Nvidia steps on the gas once again. In fact, there is a good chance of this semiconductor stock jumping to $400 in a year. Let’s see why that may be the case.
Image source: The Motley Fool.
Nvidia’s remarkable earnings growth should be rewarded with a premium valuation
Nvidia is a growth stock, meaning its revenue and earnings are growing much faster than the broader market. This was evident from the company’s latest quarterly report. Nvidia’s revenue in the first quarter of fiscal 2027 (which ended on April 26) increased by 85% year over year to a record $81.6 billion.
Its earnings per share rose 140% year over year to $1.87. That’s way above the 13% earnings growth that the S&P 500 index companies are expected to deliver in Q1 this year, according to JPMorgan. What’s more, Nvidia’s earnings exceeded the 45% estimated growth in the tech sector for Q1.
Importantly, Nvidia has outperformed the S&P 500’s earnings growth over the past year.
Data by YCharts
The good news for Nvidia investors is that its red-hot earnings growth won’t be slowing down any time soon. Its revenue guidance of $91 billion for the current…
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