Last week was an Nvidia roller coaster ride. (NVDA) -5.74%)). The stock jumped out before reporting revenues on February 26, falling 8.5% for the next session, recovering almost half of that loss on Friday.
Once the dust settled, the stock price fell by just 1.4% in three days. This is an indication that investors are somewhat neutral with regard to Nvidia’s latest printing, guidance and management commentary on revenue calls.
Wall Street could become obsessed with quarterly outcomes and highlight the slightest changes in key metrics. A better approach is to display quarterly results within the context of a comprehensive investment paper.
Below are five reasons why Nvidia remains at the top of the game, and it’s a growing stock that is currently worth buying.
Image source: Getty Images.
1. Nvidia customers continue to spend a lot of money on AI
Nvidia’s exponential growth in recent years would not have been possible without being spent on graphics processing units (GPUs) from a small number of customers.
In the 2025 fiscal year (ends January 26, 2025), Nvidia said:
These unnamed companies are most likely hyperschools such as Amazon, Microsoft, Alphabet, and Meta platforms. All of these are famous Nvidia customers, increasing capital expenditures (CAPEX). For the current fiscal year, Meta is expected to lead $65 billion in CAPEX in 2025, with Alphabet planning $75 billion, Microsoft planning about $80 billion, and Amazon expects about $100 billion.
Meta is building an AI infrastructure to support generative AI products, improve app engagement, and make Instagram the top platform for advertisers. Meanwhile, Amazon Web Services, Microsoft Azure, and Google Cloud are using the computing power of NVIDIA chips to expand their large data centers.
Nvidia’s reliance on only a handful of companies can be seen as a risk, but that’s also an advantage as it’s a reliable buyer with a deep pocket. These companies have the resources to invest even during periodic slowdowns, but smaller players may not be that flexible.
2. The competition is (almost) nowhere to be found
One of the biggest threats to Nvidia’s business model is competition. The scary competition could eat up Nvidia’s top line growth and fall into margins. But so far, that hasn’t happened.
Advanced microdevices continue to predict exponential growth in the data center GPU business, especially when they can take market share from NVIDIA, by providing high computing power at low prices. But so far, AMD simply has not provided results, and its stock price reflects investors’ disappointment. AMD has been at a 52-week low, exceeding 55% of its record high since March last year.
In comparison, Broadcom has experienced exponential growth in AI, particularly application-specific integrated circuits (ASICs). ASICs are custom engineered for specific tasks and can be cheaper than GPUs. But Broadcom is not as purely play AI name as Nvidia. Rather, it is a diverse networking company with a rapidly growing AI segment.
Meanwhile, Intel has failed to do a splash in the GPU market.
Nvidia’s ability to acquire a larger share of AI spending is a testament to its elite product portfolio and ongoing innovation. Nvidia’s latest chips designed for AI and data centers – providing $11 billion in revenue in the latest quarter. This is the fastest product lamp in the history of the company. Instead of sitting down and enjoying success, Nvidia continues to push the boundaries of new product development. Even with cyclical slowdowns, it is a great indication that you can maintain that advantage.
3. Empty margins and fast topline growth rates
One reason Nvidia sold it the day after reporting revenue was the knee’s response to a decline in gross profit.
Nvidia reported a total margin of 73% in its fourth quarter, 2025, the last quarter. This is a 3 percentage point decrease compared to the same quarter in 2024. However, the full year margin was 75%, compared to 72.7% in fiscal year 2024.
A low margin has nothing to do with business fractures. As Nvidia CFO Colette Kress explained in his latest revenue call,
During the Blackwell ramp, our total margin is lower in the 70s. At this point, we are focused on speeding up manufacturing and making it possible to deliver it to our customers as quickly as possible. When the blackwell is completely rounded, it can improve costs and total margins. So we expect it will probably be in the mid-70s later this year.
Margins are an integral aspect of Nvidia’s investment papers. The higher the margin, the more the company can convert more than 60% of its sales into operating profit, making Nvidia a highly profitable business.
As you can see on the chart, Nvidia has exponentially diluted its sales, operating income and earnings per share over the past few years.
NVDA Revenue (TTM) data by YCHARTS.
This impressive growth is why Nvidia remains at good value despite the rising stock price.
4. Reasonable and undoubtedly inexpensive rating
Nvidia is certainly a difficult stock to cherish. Stock prices are a bargain if they maintain growth even at lower speeds. However, Nvidia can be overestimated when competition, periodic slowdowns, or when spending is eliminated for AI models where AI models require computing power.
Still, some of that uncertainty is probably already priced at Nvidia’s valuation. Nvidia has a forward price (P/E) ratio of 27.8, lower than Amazon, Apple, Broadcom and Microsoft.
AMZN PE ratio (forward) data by YCHARTS.
Chip companies such as Taiwanese semiconductor manufacturing and AMD are cheaper than NVIDIA on a forward-looking earnings basis. However, Mega-Cap Tech Company and Chip Company do not have a combination of Nvidia’s industry control, revenue growth and margins.
5. Super strong balance sheet
Nvidia ended fiscal year 2025 and acquired cash and cash equivalents of $8.6 billion, $34.6 billion in marketable securities and only $8.5 billion in long-term debt.
Nvidia’s interest income increased from $866 million in 2024 to $1.8 billion in 2025. Therefore, the company not only has a net cash job, but also earns interest income in exchange for paying cash at interest costs. High interest rates, on the other hand, have a negative impact on companies whose capital structure is dependent on debt.
Nvidia’s solid balance sheet is particularly impressive considering the timing of the product’s ramp up. Nvidia has not undertaken debt to develop products in the hopes that they will be rewarded. Rather, because existing high margin products bring so much cash flow, we can afford new innovations like Blackwell to increase the cash generated from our business rather than debt. This is a major advantage for Nvidia against competition, especially when there is a cyclical slump, as NVIDIA can continue to push the boundary between science and technology. Companies with low financial health could not do so.
Selling Nvidia shares is an opportunity to purchase
Nvidia continues to be an easy purchase for investors who are confident in sustainable long-term AI spending. Even if sales growth and margins gradually decline over time, Nvidia can still be of great value as inventory is not expensive.
Investors with a period of at least 3 to 5 years of investment time should take a closer look at Nvidia. However, it is worth noting that risk tolerance and patience are paramount, as stock prices can continue to be very unstable.
