Nvidia (NVDA), a leading AI chip company, is set to release its fiscal fourth quarter and full-year 2026 earnings report on February 25th. Against a backdrop of market divergence regarding the sustainability of AI industry growth, the stock of this company, viewed as a bellwether for the AI sector, has recently experienced ongoing volatility and has now fallen to its lowest valuation level in nearly a year.
Affected by factors such as uncertainty surrounding the Federal Reserve’s interest rate cut pace and adjustments to growth expectations for the AI sector, technology growth stocks, including Nvidia, have shown recent weakness. Some investors are concerned that actual growth in the AI industry may fail to meet the exceptionally high previous forecasts. This market sentiment has driven Nvidia’s forward P/E ratio down to 24 times, a 12-month low.
Looking at historical data, after Nvidia’s stock fell to a similar valuation level last year, it subsequently accumulated a gain of 90% over the following six months, nearly doubling. This historical performance has drawn market attention: following the recent valuation correction, can Nvidia’s stock replicate last year’s trajectory?
From a fundamental perspective, Nvidia has built a comprehensive AI ecosystem over the past few years. Its graphics processing unit (GPU) product portfolio covers the entire AI industry chain from chips to supporting tools. This complete product matrix helps the company maintain its dominant market position. The latest earnings report showed the company’s revenue for the previous fiscal year exceeded $130 billion, a year-over-year increase of 114%, with gross margins consistently stable above 70%.
Company CFO Colette Kress recently indicated that actual sales of data center products are expected to surpass the previously set annual target of $50 billion. This suggests that demand for AI chips remains robust, particularly in the core AI computing field.
However, analysts point out that while current valuation levels might attract capital inflows, a near-term doubling of the stock price faces practical hurdles. Nvidia’s current market capitalization stands at $4.5 trillion. If its stock were to double within six months, its market cap would surge to $9 trillion, implying a need for capital inflows far exceeding the current market scale. Historical patterns suggest that achieving a stock price doubling is significantly more difficult when starting from a high market capitalization compared to a low one.
Industry observers believe that even if short-term gains may not match last year’s, multiple data points from the company itself and its AI clients continue to support long-term growth prospects. For long-term investors, the current valuation level may present a buying opportunity. The upcoming earnings report will serve as a crucial indicator for assessing the health of AI industry growth, with the market focusing on key information such as data center business growth rates and customer capital expenditure plans.
