Nvidia’s (NVDA) stock performance has been lackluster this year, remaining largely in a sideways trading range. However, this situation may be about to change.
Although Nvidia is no longer a secret stock and is heavily held by numerous retail investors, institutions, and mutual funds, sometimes the best choice is precisely the company you are already familiar with. The market has good reason to believe that a shift in Nvidia’s stock price trajectory is imminent.
The company’s business continues to grow, primarily driven by the robust performance of its data center segment. Over the past year, Nvidia’s data center revenue has grown by an average of 14% quarter over quarter. Company management expects total revenue for the fourth quarter of fiscal year 2026 (ending January 2025) to continue achieving 14% sequential growth compared to the third quarter. Nvidia plans to release its fiscal Q4 2026 earnings report on February 25th.
Despite sustained growth expectations, investor enthusiasm for buying Nvidia stock has been subdued this year. The company’s share price has fallen approximately 2% year-to-date, and its current forward price-to-earnings (P/E) ratio stands at about 23 times. For a company maintaining significant, ongoing growth, this valuation is roughly in line with the overall market level.
Nvidia’s Chief Financial Officer, Colette Kress, has repeatedly reiterated that the company expects spending on artificial intelligence (AI) infrastructure to reach between $3 trillion and $4 trillion by 2030. She stated, “The scale and scope of this infrastructure build-out present a significant long-term growth opportunity for Nvidia.”
Some analysts predict that when the company announces its earnings on Wednesday, February 25th, investors will begin to re-appreciate the company’s value and its stock’s fair valuation. This is expected to support its stock price achieving a performance exceeding the average market P/E ratio.
Meanwhile, the latest developments between Nvidia and its significant customer, Meta Platforms (META), are also drawing close attention. As one of the most prominent companies in the AI field, Meta Platforms has been diligently developing artificial intelligence in recent years, with goals including providing superintelligence to users globally. To this end, Meta has invested tens of billions of dollars in building data centers, developing large language models, and creating AI features for its app users and advertisers.
Meta is one of Nvidia’s largest customers, purchasing its graphics processing units (GPUs) to support critical tasks like AI model training. Although Meta is also a customer of Nvidia’s competitor, AMD, and develops its own in-house chips, its latest move demonstrates the depth of its collaboration with Nvidia.
Recently, Meta signed a new cooperation agreement with Nvidia to procure millions of chips, including GPUs, standalone central processing units (CPUs), as well as networking and security technologies. While the transaction amount was not disclosed, some analysts estimate the agreement could be worth “tens of billions of dollars.”
A key point of this deal is that Meta will adopt Nvidia’s data center CPUs, marking a significant breakthrough for Nvidia, known primarily for its GPUs, in the data center CPU market. More importantly, this transaction underscores Nvidia’s leadership in the AI field. Despite having its own in-house chips and the potential to switch to other suppliers, Meta ultimately chose Nvidia as the core pillar of its AI infrastructure. Meta’s strong emphasis on AI indicates it is seeking the top-tier products to lead its development path, and Nvidia has once again become its preferred choice.
All this information should help alleviate investor concerns about Nvidia potentially losing market share and spark optimism regarding the launch of its next-generation chips later this year. As the earnings release date approaches, the market is waiting to see if this AI chip giant can use its performance to break the stock’s price calm and initiate a new upward channel.
