There's no denying the volatility of Nvidia (NVDA +0.88%) in recent months. Case in point: After soaring 1,320% since early 2023, the stock began to lose altitude in late October. Uncertainty about the future adoption of artificial intelligence (AI) and fears about rising competition took hold -- and fair-weather investors got nervous. During the ensuing five months, the stock crept steadily lower, in a downturn that saw the chipmaker shed roughly 20% of its value.
The tide of sentiment has turned, and Nvidia stock has done something that has never happened before in the company's storied history -- and it holds an important lesson for investors.
Image source: The Motley Fool.
A record-setting run
Wednesday saw the S&P 500 and Nasdaq Composite indexes each close at new all-time highs. Nvidia climbed for its 11th successive trading day, making it the stock's longest streak of consecutive daily gains on record -- going back to the company's IPO on Jan. 22, 1999. It would be easy to gloss over this stretch, yet it's a feat so rare that Nvidia hasn't achieved it in more than a quarter-century.
Wednesday's move brings the stock price up more than 14% in roughly two weeks, and less than 4% from a new record high (as of this writing).
Yet it doesn't take much effort to identify the tailwinds that eventually drove the stock back up. Some market commentators suggest that investors have been looking for AI-related stocks with greater growth potential, but Nvidia's results stand out -- and speak for themselves.
During its fiscal 2026 fourth quarter (ended Jan. 26), Nvidia generated record revenue of $68 billion, up 73% year over year and adjusted earnings per share (EPS) of $1.62, up 82%. Management is guiding for Q1 revenue of $78 billion, which would represent year-over-year growth accelerating to 77%.
NASDAQ: NVDA
Key Data Points
There's more. At the GPU Technology Conference (GTC) last month, CEO Jensen Huang said Nvidia expected to sell "at least" $1 trillion worth of Blackwell and Vera Rubin AI chips between now and 2027. For context, the company generated $216 billion in revenue last year, so $1 trillion in revenue would imply significantly higher sales over the next two years.
Finally, there's Nvidia's valuation. The stock is currently selling for about 41 times earnings. While that might seem pricey, it's a far cry from the average multiple of 72 it's traded at over the past three years. If the stock merely returned to its three-year average, the price would climb 78% to about $353, or a market cap of $8.5 trillion.
The lesson here is that the stock price doesn't always reflect the fundamentals, so investors should be wary of selling a company based on stock price movements. From an investing standpoint, it would be hard to find a company that can match Nvidia's sales and profit growth.
That's why Nvidia stock remains an unqualified buy.
