Nvidia (NASDAQ: NVDA) reported its fiscal 2027 Q1 earnings on May 20, hitting highs and lows. Revenue of $81.6 billion beat expectations of $78.8 billion, while earnings per share of $1.87 were $1.76 above expectations.
However, the stock price did not respond well. When you are a $5 trillion company, it becomes difficult to please the market. The stock price has risen nearly 1,400% in the past five years, and many are wondering if the big gains have already been made.
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That answer depends on a number of factors, including expectations surrounding the timing of the investment.
A crowded field
In Artificial Intelligence (AI), Nvidia has been the face of the investment opportunity with advanced chips. That gap, however, is becoming increasingly crowded as companies look to become less dependent on a dominant chip maker.
Nvidia’s own customers are big tech, like him Meta Platformsthey build their own custom chips. It also sees competition heating up in the application-specific integrated circuit (ASIC) chip market. These are chips that are designed to perform specific tasks. Cerebral Systemsfocused on ASIC, went public in May.
It’s still a strong company
Despite increasing competition, Nvidia remains financially strong. Its gross margin was 75% in the first quarter, indicating more pricing power. It also raised its dividend per share from $0.01 to $0.25 and authorized $80 billion in share buybacks, indicating that it has plenty of cash.
Nvidia also has the opportunity to integrate AI software into hardware to interact with the physical world, or what some call physical AI. Examples include chips that can power autonomous vehicles and robots.
Anyone expecting Nvidia to soar immediately after each earnings report or for the company to deliver another 1,000% or more in profits over the next five years is likely to be disappointed. Conversely, anyone who plans to hold this stock for a decade or more can still make meaningful gains as Nvidia constantly strives to maintain its position as the leader in the AI chip market.
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