Nvidia (NVDA), stock price 'hesitates' despite 71% revenue increase... "Betting on early slowdown of AI growth"

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Despite Nvidia (NVDA) increasing its revenue by 71%, its forward price-to-earnings (P/E) ratio remained at 21x. This is analyzed as the market betting on an early slowdown in artificial intelligence (AI) growth.

According to Nasdaq on August 5 (local time), Nvidia's revenue for the most recent 12 months increased by 71% to $253 billion. Net profit more than doubled to approximately $160 billion. Although its market capitalization reached approximately $5.1 trillion, its forward price-to-earnings ratio was only about 21x. The media analyzed that this level is closer to the valuation applied to large companies entering a stable phase rather than rapidly growing companies.

The pace of growth did not slow down; rather, it accelerated. Nvidia's quarterly revenue growth rate increased from 56% a year ago to 85% in the first quarter of fiscal year 2027. First-quarter revenue, which ended on April 26, was $81.6 billion, exceeding the total revenue for fiscal year 2024. The company projected second-quarter revenue to be approximately $91 billion, nearly double the $46.7 billion from the same period last year.

The data center business, which supplies AI semiconductors and network equipment, boosted performance. Data center revenue surged 92% year-over-year to $75.2 billion in the first quarter. Gross profit margin recorded approximately 75%, and adjusted earnings per share increased by 140% to $1.87. Nvidia CEO Jensen Huang stated, "The construction of AI factories, the largest infrastructure expansion in human history, is accelerating at an astonishing pace."

Nvidia increased its quarterly dividend from $0.01 to $0.25 per share and approved an $80 billion share repurchase program. This decision connects its strong cash generation capabilities to shareholder returns. The market expects earnings per share over the next year to reach approximately $10, an increase of over 50% from the $6.53 recorded over the most recent 12 months.

However, the semiconductor industry's business cycles and major customers' development of their own chips are risk factors. If AI investment ceases, the stock price, which is valued based on next year's earnings, could also suffer a significant shock. The media acknowledged the possibility of Nvidia's growth rate decreasing in the long term but assessed that the current forward P/E ratio of 21x reflects a outlook closer to a halt in growth rather than a slowdown.

[Article Key Summary]

-Nvidia's revenue for the most recent 12 months increased by 71% to $253 billion, with net profit recorded at approximately $160 billion.

-First-quarter revenue for fiscal year 2027 increased by 85% to $81.6 billion, and data center revenue surged by 92% to $75.2 billion.

-The forward price-to-earnings ratio is approximately 21x, leading to an analysis that the market is reflecting a rapid slowdown in AI growth.

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