Key Takeaways
- Tom Lee from Fundstrat maintains Nvidia remains undervalued, noting the P/E ratio continues to compress even as earnings surge
- The chipmaker delivered Q2 revenue of $96.2B, representing 106% year-over-year growth, with adjusted EPS of $2.22 surpassing forecasts
- Management provided forward guidance of approximately $108B for the upcoming quarter, reflecting robust AI infrastructure spending
- Blue Zone Wealth Advisors expanded its Nvidia holdings by 21.4% during Q2, now holding approximately $25.9M in shares
- Wall Street consensus stands at “Moderate Buy” with analysts projecting an average target of $322.61; shares started Friday at $227.98
Fundstrat’s Head of Research Tom Lee continues to stand by his optimistic outlook on Nvidia (NVDA), maintaining that the semiconductor giant remains attractively priced despite its impressive performance and stellar quarterly results.
“What really catches attention is that Nvidia’s valuation multiple remains surprisingly modest,” Lee explained during his CNBC appearance. “Despite enormous upward revisions, the stock price hasn’t matched the pace. The result is a continuously declining P/E ratio.”
Shares of NVDA began trading Friday at $227.98. Over the past year, the stock has fluctuated between a low of $164.07 and a peak of $236.54, supporting a market capitalization of $5.52 trillion.
Nvidia announced second-quarter revenue reaching $96.22 billion, representing a remarkable 105.9% increase compared to the same period last year. Earnings per share landed at $2.22, exceeding analyst consensus projections of $2.09 by $0.13.
This represents substantial growth from the previous year’s EPS of $1.05, underscoring the company’s accelerating earnings trajectory.
Management’s outlook calls for roughly $108 billion in sales during the present quarter. This robust forward projection continues to fuel positive sentiment among Wall Street analysts.
Fundstrat characterized Nvidia’s triple-digit revenue expansion as “absolutely remarkable.” In their August 26 research note, the investment firm suggested Nvidia’s 2028 revenue projections “could propel shares toward fresh record highs.”
Institutional Investment Activity Intensifies
Blue Zone Wealth Advisors boosted its Nvidia allocation by 21.4% during the second quarter, expanding its position to 129,666 shares with an approximate value of $25.9 million. Nvidia currently represents 4.5% of the advisory firm’s total portfolio, ranking as its seventh-largest investment.
Additional institutional players have joined the momentum. Longfellow Investment Management expanded its stake by 47.9% in Q2. Meanwhile, Spurstone Advisory Services and Phillip James Consulting established fresh positions during the same timeframe. Institutional investors and hedge funds now control 65.27% of Nvidia’s shares outstanding.
The average analyst price target currently stands at $322.61, supported by 48 Buy ratings, two Strong Buy recommendations, and four Hold ratings.
Capital Return Programs and Insider Transactions
Nvidia’s board greenlit an $80 billion stock buyback authorization in May. Additionally, the company announced a quarterly dividend distribution of $0.25 per share, scheduled for October 1 payment to shareholders registered as of September 10.
Conversely, company insiders have divested approximately $410.4 million in stock value during the trailing 90-day period. Director Stephen C. Neal disposed of 15,500 shares at an average price of $215.73 in early June. Director Mark A. Stevens offloaded 885,000 shares at $210.17 in mid-June.
Rosenblatt Securities established the Street’s most bullish price objective this week at $390. Both UBS and Jefferies maintain $300 targets alongside Buy recommendations.
The stock currently trades at a P/E ratio of 28.82, features a PEG ratio of 0.41, and carries a beta of 2.23.
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