Nvidia Is Getting Bigger Without Getting Expensive

Nvidia Is Getting Bigger Without Getting Expensive

Sushree Mohanty

Sat, August 29, 2026 at 6:30 PM GMT+3 5 min read

• NVDA -4.57%

Nvidia (NVDA) has reached a point where its size and market cap alone can make it look intimidating. Over the last five years, Nvidia's stock has skyrocketed by 817.8%, while its market capitalization has grown from roughly $557 billion to about $5 trillion today. That means Nvidia is now worth about 9.1 times what it was five years ago. And this phenomenal growth was not because of hype. The company is already generating tens of billions of dollars in quarterly revenue, its AI chips are at the heart of the industry's infrastructure buildout, and investors have seen its profitability grow at an incredible rate.

And its recent fiscal second-quarter earnings released on Aug. 26 show that growth is far from slowing. Surprisingly, even if Nvidia is getting dramatically bigger, the stock is still reasonably valued. What could be the reason behind it, and should investors take advantage of that? Let us find out.

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Nvidia Has Become Huge, and the Next Product Cycle Could Keep the Numbers Moving

In the second quarter of fiscal 2027, Nvidia generated $96.2 billion in total revenue, an increase of 106% year-over-year (YoY), while adjusted earnings increased 120% to $2.22 per share. The data center business continues to dominate Nvidia's revenue, with Blackwell playing a significant role. Total sales for the segment stood at $89 billion in the quarter, up 18% sequentially and 117% YoY.

Management claimed that the five largest hyperscalers' capital expenditures, which could be approximately $800 billion in 2026 and $1.3 trillion in 2027, are fueling growth of the data center segment. While Nvidia alone does not account for all of that spending, it shows the scale of the infrastructure market the company is operating in. Nvidia is also deepening its partnership with Amazon's (AMZN) AWS. Between this quarter and the second quarter of fiscal 2029, AWS intends to deploy an additional 2 million Nvidia GPUs alongside Vera CPUs, with some systems incorporating Rubin. The partnership goes beyond hardware. AWS will offer Nvidia's Nemotron models through its cloud services, and Amazon also intends to employ Nvidia's broader physical AI technology for warehouse robotics.

While Nvidia's existing products are already dominating the industry, the company appears to have another major product transition already underway. Blackwell is still contributing heavily, Rubin is beginning its ramp, CPUs and networking are expanding, and new customers are emerging across sovereign AI, enterprises, NeoClouds, and AI labs. Management now expects Vera Rubin to be the company's fastest-growing product in history.

Nvidia now forecasts third-quarter revenue of around $108 billion, plus or minus 2%, with Vera Rubin accounting for roughly 20% of data center revenue. Management also predicted a 70% increase in revenue in fiscal 2028, while mentioning that this forecast IS constrained by supply.

Nvidia Is Getting Bigger Without Getting Expensive

The market may still be looking at Nvidia as the company that sells the chips powering today's AI boom. However, Nvidia's opportunity is expanding beyond selling individual GPUs. The company is finding ways to generate substantially more revenue from each unit of power deployed in an AI data center. Management sees that opportunity reaching roughly $40 billion per gigawatt with Vera Rubin, more than twice the level associated with Hopper. Plus, the company is also expanding into CPUs, networking, and broader AI infrastructure.

Yet, the stock remains reasonably valued at 23x forward fiscal 2027 earnings. Analysts expect Nvidia's revenue to increase by 83% to $396.73 billion in fiscal 2027, while EPS climbs by 89.8% to $9.05. Revenue and earnings are expected to further climb by 44.6% and 45%, respectively, in fiscal 2028. And the company's own outlook gives investors a reason to take these estimates seriously. Notably, demand remains strong, supply is still constraining growth, new products are expanding Nvidia's opportunity per gigawatt, and the company is moving deeper into networking, CPUs, software, and full-stack AI infrastructure. Therefore, Nvidia's valuation looks reasonable relative to the pace at which its earnings and revenue are expanding.

But Why Is NVDA Stock Still Reasonably Valued?

Nvidia is already enormous. After years of extraordinary expansion, now the market may be pricing in a significant slowdown in Nvidia's growth. And the main reason behind this could be competition. Nvidia's biggest customers are increasingly becoming its strongest competitors. Alphabet's (GOOG) (GOOGL) Google has its TPUs, while Amazon has its Trainium. Meanwhile, Microsoft (MSFT) is developing its own silicon, while OpenAI, Anthropic, and Meta (META) have also been developing their custom chips. Separately, Advanced Micro Devices (AMD) is building a credible second source of AI computing for AI companies, or, in other words, an "escape hatch" from Nvidia.

Overall, the reasonable valuation explains that the market may be pricing Nvidia for slowing growth, rising competition, and a maturing AI spending cycle. However, Nvidia's recent Q2 earnings and its outlook suggest that the market may be underestimating how long its growth can remain elevated. And if growth remains stronger five years down the line, today's valuation could be an attractive entry point for long-term investors.

On Wall Street, NVDA stock remains a consensus "Strong Buy." Out of the 48 analysts covering the stock, 43 have a "Strong Buy" recommendation, three rate it a "Moderate Buy," one has a "Hold" rating, and one analyst has a "Strong Sell" rating. Wall Street's mean target price of $307.38 for NVDA implies a potential upside of 37% from current levels. Plus, the high price estimate of $500 implies a potential upside of 122% over the next 12 months.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com