On Feb. 25, Nvidia (NVDA 1.48%) delivered its highly anticipated fourth-quarter fiscal 2026 earnings report. Despite sky-high expectations, Nvidia continues to produce impeccable results quarter after quarter. But with the stock up so much in just a few years, some investors may be concerned that Nvidia is priced for perfection.
Let's contextualize Nvidia's record year and potential to see if the growth stock is still a buy now.
Image source: Nvidia.
Nvidia's record year
Nvidia's stock price has soared 724% in just four years -- crushing the S&P 500, Nasdaq Composite, and tech sector by a wide margin. At first glance, it looks like a bubble on the brink of bursting. But Nvidia's results back up the stock's move.
In just four years, Nvidia has gone from less than $5 billion in net income to $120.1 billion -- making it the second most profitable company in the world, behind Alphabet. Its revenue and net income have grown faster than its stock price, and Nvidia is still converting over $0.55 of every dollar in sales into after-tax net income.
|
Metric (GAAP) |
Fiscal 2023 |
Fiscal 2024 |
Fiscal 2025 |
Fiscal 2026 |
|---|---|---|---|---|
|
Revenue |
$27 billion |
$60.9 billion |
$130.5 billion |
$215.9 billion |
|
Gross margin |
56.9% |
72.7% |
75% |
71.1% |
|
Operating margin |
15.6% |
53.2% |
62.5% |
60.6% |
|
Net income |
$4.4 billion |
$29.8 billion |
$72.9 billion |
$120.1 billion |
|
Net profit margin |
16.3% |
48.9% |
55.8% |
55.6% |
Data source: Nvidia. GAAP = generally accepted accounting principles.
Thanks to strong demand for its Blackwell and Rubin chips, Nvidia is guiding for $78 billion in first-quarter fiscal 2027 revenue and 75% GAAP gross margin. That would be a 14.5% quarter-over-quarter increase and a staggering 76.9% increase from the first quarter of fiscal 2026.
NASDAQ: NVDA
Key Data Points
A concentrated customer base
Nvidia's results and near-term guidance are nothing short of extraordinary. However, some investors may be concerned that Nvidia is overly reliant on just a handful of customers -- making it prone to a cyclical downturn in artificial intelligence (AI) spending.
On its Feb. 25 earnings call, Nvidia said that the top five cloud providers and hyperscalers collectively account for a little over 50% of its data center revenue. But analyst expectations for 2025 capital expenditures from these customers are up nearly $120 billion since the start of 2026, approaching $700 billion in total. These five customers are probably Amazon, Microsoft, Alphabet, Meta Platforms, and Oracle.
So while it's true that Nvidia relies on a handful of customers, the business cycle is still in full-throttle expansion mode and showing no signs of a downturn. It's also worth noting that Nvidia is doing increasingly more business with Anthropic, OpenAI, and Groq, including a $10 billion investment in Anthropic and a potential $30 billion investment in OpenAI. So as those companies grow, Nvidia could become less dependent on the current "big five."
Nvidia is a buy
Nvidia's stock price didn't react much to its latest earnings print. But the results and management commentary on the earnings call were music to the ears of long-term investors.
Nvidia remains a high-margin cash cow that can afford to aggressively invest in product innovation to capture the bulk of next-generation AI spending -- giving it a long runway for future earnings growth.
Add it all up and Nvidia remains a high conviction buy and a foundational AI stock to build a portfolio around.
