NVIDIA Corporation

(NASDAQ Global Select)
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Somewhat Bullish +35

Jim Cramer sends a strong signal to Nvidia stock investors

Analyst upgrade Earnings report Financial outlook AI-generated analysis

πŸ“‰ Nvidia shares have dropped about 22% over the past month, closing down nearly 7% on Wednesday amid a broad chip sector sell-off.

πŸ’° Jim Cramer highlights that Nvidia is trading at 16.5 times forward earnings, the cheapest multiple in roughly a decade compared to a 15-year average of 30x.

πŸ“ˆ Fiscal second-quarter revenue reached $96.2 billion with data center revenue jumping 117% to $89 billion.

πŸ’΅ The company posted earnings of $2.22 per share, beating the consensus estimate of $2.09.

πŸš€ Nvidia guided for fiscal third-quarter revenue of $108 billion, though some investors expected higher figures.

πŸ”„ Total buyback capacity now stands at $235 billion after repurchasing about $39.8 billion in the first half of fiscal 2027.

⚠️ Gross margins are under pressure, coming in at 75% last quarter and guided to fall to between 71% and 72% by Q4 fiscal 2027.

πŸ—οΈ Margin compression is attributed to higher initial costs for the next-generation Blackwell architecture and rising memory costs.

πŸ“‰ Days sales outstanding jumped to 60 days from 45, indicating customers are stretching payment terms as spending programs become more complex.

πŸ”­ Bank of America maintains a Buy rating, calling the selloff an enhanced buying opportunity for investors.

Bullish Signals
  • Jim Cramer argues Nvidia is trading at 16.5 times forward earnings, the cheapest multiple in about a decade compared to a 15-year average of roughly 30x.
  • Nvidia posted fiscal second-quarter revenue of $96.2 billion with data center revenue surging 117% to $89 billion.
  • The company beat earnings estimates at $2.22 per share, demonstrating strong profitability despite market volatility.
  • Total buyback capacity now stands at $235 billion, showing aggressive capital return to shareholders.
  • Bank of America maintains a Buy rating and calls the recent selloff an enhanced buying opportunity for investors.
  • Morgan Stanley views Nvidia as the best value in its group following the significant stock price decline.
Risk Factors
  • Nvidia shares have dropped about 22% over the past month, with Wednesday's session seeing a nearly 7% decline.
  • Gross margins are under pressure, coming in at 75% last quarter and guided to fall to between 71% and 72% by Q4 fiscal 2027.
  • Margin compression is attributed to higher initial costs for ramping up the next-generation Blackwell architecture and rising memory costs.
  • Days sales outstanding jumped to 60 days from 45, indicating customers are stretching payment terms as spending programs become more complex.
Full Analysis
Nvidia shares have dropped approximately 22% over the past month, closing down nearly 7% on Wednesday amid a broad sell-off in the chip sector. Jim Cramer of CNBC's Mad Money argues that the current valuation represents the cheapest multiple for Nvidia in about a decade, standing at 16.5 times forward earnings compared to a 15-year average of roughly 30 times. Despite the stock decline, Nvidia reported strong business results in its fiscal second quarter with revenue reaching $96.2 billion and data center revenue surging 117% to $89 billion. The company beat earnings estimates at $2.22 per share and guided for fiscal third-quarter revenue of $108 billion, though some investors expected higher figures. Nvidia is aggressively utilizing its cash reserves, having repurchased about $39.8 billion in stock during the first half of fiscal 2027 with total buyback capacity now at $235 billion. However, gross margins are under pressure, coming in at 75% last quarter and guided to fall to between 71% and 72% by the fourth quarter of fiscal 2027 due to costs associated with ramping up the Blackwell architecture. Analysts remain bullish on the stock despite the recent volatility. Bank of America maintains a Buy rating, calling the selloff an enhanced buying opportunity, while Morgan Stanley views Nvidia as the best value in its group. Wall Street consensus price targets average around $309, implying significant upside from current levels.