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Equity Research & InsightsAfter Earnings, Is Nvidia Stock a Buy, a Sell, or Fairly Valued?

With continued outperformance year on year, and strong revenues from different avenues, here’s what we thought of Nvidia stock.

Nvidia NVDA released its fiscal first-quarter earnings report on Feb. 26. Here’s Morningstar’s take on Nvidia’s earnings and stock.

Key Morningstar Metrics for Nvidia

Fair Value Estimate: $130.00

Morningstar Rating: ★★★

Morningstar Economic Moat Rating: Wide

Morningstar Uncertainty Rating: Very High

What We Thought of Nvidia’s Earnings

We maintain our $130 fair value estimate for Nvidia, as the company reported another quarter of strong results while providing guidance that exceeded FactSet consensus estimates. Shares appear fairly valued to us as we think the market is pricing in both the tremendous potential for Nvidia’s artificial intelligence solutions and the risk of slower spending on such products beyond calendar 2025.

Revenue in the January quarter was $39.3 billion, up 12% sequentially, up 78% year over year, and ahead of guidance of $37.5 billion and FactSet consensus estimates of $38.1 billion. Data center revenue is still the once-in-a-generation growth driver for Nvidia, up 93% year over year. Revenue from new Blackwell products was $11 billion and exceeded management’s expectations. Adjusted gross margin came in at 73.5%, down 150 basis points sequentially but in line with guidance due to higher costs associated with new Blackwell products.

Nvidia expects April-quarter revenue to be $43 billion, which would be up 9% sequentially, up 65% year over year, and ahead of FactSet consensus estimates of $42.1 billion. Despite the selloff in late January associated with the emergence of DeepSeek, we still see no meaningful signs that data center demand is waning in the near-term, and we’ve been encouraged with the capital expenditure plans of cloud computing leaders for the upcoming year. We still suspect that Nvidia will sell virtually everything it can make in calendar 2025. The only blemish we saw within these results was the forecast for first-quarter adjusted gross margin to come in at 71%, implying another sequential decline due to the Blackwell ramp, although we’d be impressed if management can achieve its target to reach the mid-70% range later this year.

Fair Value Estimate for Nvidia

With its 3-star rating, we believe Nvidia’s stock is fairly valued compared with our long-term fair value estimate of $130 per share. This fair value estimate implies an equity value of roughly $3.2 trillion. Our fair value estimate implies a fiscal 2026 (ending January 2026 or effectively calendar 2025) price/adjusted earnings multiple of 29 times and a fiscal 2027 forward price/adjusted earnings multiple of 24 times.

Our fair value estimate, and Nvidia’s stock price, will be driven by its prospects in the data center, or DC, and AI GPUs, for better or worse. Nvidia’s DC business has achieved exponential growth already, rising from $3 billion in fiscal 2020 to $115 billion in fiscal 2025. DC revenue remains supply-constrained and near-term revenue will rise as more supply comes online. DC revenue exited fiscal 2025 at $35.6 billion in the January 2025 quarter and a $142 billion annual run rate. We model incremental quarterly revenue growth of about $4 billion per quarter in fiscal 2026, which brings our fiscal 2026 DC revenue estimate to $183 billion. We then model 21% growth to $222 billion in fiscal 2027, and 12% growth to $249 billion in fiscal 2028, resulting in a 29% CAGR from fiscal 2026 to fiscal 2028.