Is the Premium Price Still Worth It?

Nvidia is definitely not slowing down anytime soon. With an amazing 59.3% spike over the last three months, the AI chip behemoth not only surpassed its semiconductor opponents but also left the broad technology industry behind.  Closing at $180 on August 4, just below its 52-week high of $183.30 reached on July 31, Nvidia’s run suggests increasing investor confidence in its long-term leadership despite global economic adversity and regulatory challenges. 

On the other hand, major stocks such as Broadcom, Marvell Technology, and QUALCOMM gained 48.9%, 25.5%, and 5.5% respectively, within the same period. It seems quite obvious that Nvidia isn’t only surfing the AI wave, it’s creating the surfboard.

AI Expansion Drives Nvidia’s Data Center Supremacy

The core of Nvidia’s momentum is its Data Center business, which has evolved into a revenue generating behemoth. During Q1 fiscal 2026, the segment contributed an astonishing 89% of revenues, generating $39.1 billion, which is a 73% jump year on year and a 10% increase from the last quarter. This expansion is fueled by relentless demand for AI computing, as companies and hyperscalers invest heavily in AI infrastructure. 

Nvidia’s Hopper 200 and Blackwell chips are already in fact industry standards, and the upcoming Blackwell Ultra and Vera Rubin platforms offer even more performance enhancements. With AI infrastructure requiring an increase across all major sectors of the industry, Nvidia is well-positioned to remain the hardware provider of choice in the industry.

Geopolitical Risk Confronts Financial Resilience

Though export bans on the H20 chips in China are likely to burden short-term revenues, Nvidia has been surprisingly resilient. The firm took a $2.5 billion revenue blow in Q1 and anticipates another $8 billion decline in Q2. 

Still, it received bullish guidance of $45 billion for Q2 revenues, which is 50% year over year growth. Earnings have not been disappointing either. Non-GAAP EPS grew 33% in Q1, driven by good margins and strong operational productivity. 

As per Zacks, analysts estimate 52% revenue growth in fiscal 2026 and close to 26% in fiscal 2027, with corresponding earnings growth of 42.5% and 32.2%. Nvidia is for sure going through macro headwinds without any issues.

Nvidia’s Costly Stock

Trading at 36.3x forward earnings, Nvidia is considerably pricier than industry peers and a few of its competitors. Broadcom is trading at 37.79x, Marvell Technology is trading at 24.03x, and QUALCOMM is trading at a relatively low 12.47x. Nvidia’s valuation is supported by bold revenue estimates and AI supremacy, but investors should remain vigilant of what they’re paying.

Nvidia for the Long Term

With its top notch AI chips, enormous data center growth, and transparent financial strength, Nvidia is a stock to keep, not sell. Even though its valuation may create nervousness in the short term for vigilant investors, long-term fundamentals cannot be overlooked. The company sits at the center of a revolution, where the growth story keeps on going.

Nvidia is rooted in genuine growth, and does not rely on hype. Its Data Center business alone represents close to 90% of its revenue and is accelerating at a breakneck speed. It’s no longer merely a chipmaker, rather it’s the heart of AI infrastructure. 

Although rivals such as Broadcom and Marvell are making respectable progress, they’re on stage trying to catch up with Nvidia. On the other hand, Nvidia’s forward P/E of 36.3x dictates that the company must continue to surprise on the upside simply to keep valuations at current levels. One slip, perhaps geopolitical tensions or timing issues related to chip rollouts, and investors may get in trouble.

For some, cashing out might look attractive, but for long-term investors, it appears the wiser choice is to continue holding on to Nvidia. The company is not only winning the race but also designing the courses, creating pathways, and selling the trophies. 

The fundamentals are impressive, the leadership looks promising to the future, and the demand for the market is snowballing. Certainly, valuation concerns carry weight, but iconic companies trade at premium for good reason. So, if an investor portfolio doesn’t require any pruning or if investors are not okay with volatility, then it’s possible that holding onto it just a little bit longer may reward one tremendously.