Nvidia Surged Today -- Is It Too Late to Buy the Artificial Intelligence (AI) Leader's Stock?
Nvidia (NASDAQ: NVDA) stock posted a big gain in Wednesday's trading session, up by 12.8% at the close, according to data from S&P Global Market Intelligence.
The chipmaker got a boost from bullish news in the quarterly reports published by Advanced Micro Devices and Microsoft Tuesday. Both high-profile tech players beat expectations for sales and earnings, and each shared additional details that bode well for Nvidia.
Is it too late to buy Nvidia stock?
In its Q2 report, AMD touted a 115% year-over-year revenue increase for its data center segment. That's likely a positive sign for Nvidia, despite AMD being a competitor in the market.
Nvidia is by far the leader when it comes to making high-powered graphics processing units (GPUs) for data centers and artificial intelligence (AI) applications, and AMD's second-quarter results signal that demand in that category remains robust. AMD stock closed out Wednesday up 4.4%.
Microsoft's stock actually fell 1.1% after its Azure cloud segment missed some analysts' expectations, but the software giant had good news for Nvidia investors. Microsoft, which is widely believed to be Nvidia's biggest customer, reported that it was continuing to increase its capital expenditures to strengthen its AI initiatives.
On the heels of Wednesday's pop, Nvidia is trading at roughly 43 times this year's expected earnings. That's a growth-dependent valuation, but it doesn't look exorbitant when viewed in the context of the company's recent performance, competitive strengths, and untapped growth opportunities.
NVDA PE Ratio (Forward) data by YCharts.
In its fiscal 2025 first quarter (which ended April 28), Nvidia's sales surged 262% year over year to $26 billion, and earnings per share increased 629%. For fiscal Q2, management's guidance was that sales would increase by 107% to $28 billion, and it's likely that its earnings per share will once again more than double. The company is scheduled to publish its fiscal Q2 results after the market closes on Aug. 28.
Expectations are undoubtedly high for Nvidia, and the stock could remain volatile in the weeks leading up to and following the report. But signs suggest that demand for its hardware has remained strong, and the release of the company's next-generation Blackwell chip platform looks poised to be a major performance catalyst for it later this year.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
