Ahead of Earnings, Is Nvidia Stock a Buy, a Sell, or Fairly Valued?

Nvidia NVDA is set to release its fiscal first-quarter earnings report. Here’s Morningstar’s take on what to look for in Nvidia’s earnings and the outlook for its stock.

Key Morningstar Metrics for Nvidia Stock

• : $260
• : ★★★

• Morningstar Economic Moat Rating

  : Wide

• Morningstar Uncertainty Rating

  : Very High

Nvidia Earnings Release Date

• Wednesday, May 20, 2026, after the close of trading

What to Watch for in Nvidia’s Q1 Earnings

• Nvidia guided to over $300 billion in revenue in calendar 2026, which is effectively fiscal 2027. We’ll look to the quarterly earnings report to gauge whether Nvidia and its supply chain partners are on track to hit this revenue target.
  • Hyperscale capital-expenditure plans show no signs of slowing down, so the market should remain robust.
  • Hyperscalers are seeking to use their own in-house chips more and more, so we’ll see if that makes a dent in Nvidia’s forecasts in any way.
• In artificial intelligence, we’re seeing high demand for server CPUs. Also, the looming Cerebras IPO bodes well for low-latency AI-inference semis. Nvidia acquired the technology from Groq to support low-latency inference.
  • Between networking, server CPUs with Grace/Vera, and Groq, we’ll be interested in Nvidia’s progress in peripheral (non-GPU) AI semis.
• The AI infrastructure buildout is one of the largest global projects conducted this century. We’re seeing a host of supply chain constraints, tightness, and bottlenecks.
  • With this in mind, we’ll want to better understand Nvidia’s manufacturing progress and coordination to gauge whether it can hit its aggressive annual product cadence on time.
• We expect to hear some sort of update regarding sales in China.
• We anticipate that investors will still seek a beat-and-raise quarter.
  • Nvidia remains on a healthy streak of reporting results that were ahead of its quarterly guidance, while guiding for the upcoming quarter ahead of FactSet consensus estimates.
• We have a $260 fair value estimate and a wide-moat rating for Nvidia.
  • We don’t see any risk to Nvidia’s moat. Nvidia’s superior GPU hardware for AI, software ecosystem around Cuda, and networking and interconnectivity expertise should allow the company to remain at the forefront of AI workloads.
  • We have a Very High Morningstar Uncertainty Rating for Nvidia, as generative AI is still in its relative infancy, and the market size is unclear in a few years from now.
  • Shares appear undervalued to us. It appears that investors have gravitated away from Nvidia as an AI investment and toward a host of other AI “picks and shovels” plays in memory and optical semis. We still see upside in Nvidia’s shares as long as it remains on pace to hit its near- and medium-term revenue targets.

Fair Value Estimate for Nvidia Stock

With its 3-star rating, we believe Nvidia’s stock is moderately undervalued compared with our long-term fair value estimate of $260. Our fair value estimate implies a fiscal 2027 (ending January 2027 or effectively calendar 2026) and fiscal 2028 price/adjusted earnings multiple of 33 times and 22 times, respectively. Our fair value estimate and Nvidia’s stock price will be driven by its prospects in the data center and AI GPUs, for better or worse.

Nvidia’s data center business has already achieved exponential growth, rising to $194 billion in fiscal 2026 from $3 billion in fiscal 2020. We estimate it will be $333 billion in fiscal 2027, representing 72% annual growth. Nvidia has disclosed at its March 2026 GTC conference that it has high confidence in $1 trillion of cumulative revenue for its Blackwell and Rubin products from the start of calendar 2025 to the end of calendar 2027.

Read more about Nvidia’s fair value estimate.

Economic Moat Rating

We assign Nvidia a wide economic moat rating, thanks to intangible assets around its graphics processing units and high customer switching costs around its proprietary software, Cuda, for AI tools, which enables developers to use Nvidia’s GPUs to build AI models. Nvidia has emerged as the clear market share leader in discrete GPUs. We attribute Nvidia’s leadership to intangible assets associated with GPU design, as well as the associated software, frameworks, and tools required by developers to work with these GPUs.

Nvidia’s entrenchment in AI training makes it a likely winner in AI inference as well, not only as training GPUs are repurposed for inference, but as Nvidia uses its training know-how to push the needle on more innovative inference products. Beyond Nvidia’s AI prowess today, which we believe is exceptionally strong, we think the company is making the proper moves to widen its moat even further. Nvidia’s software efforts with Cuda remain impressive, while Nvidia expanded into networking solutions, most notably with its acquisition of Mellanox for InfiniBand and, more recently, with its Spectrum Ethernet products. Thus, neutral merchant GPU vendors will likely be demanded by enterprise customers, and again, we foresee Nvidia remaining at the head of the pack for quite some time.

Read more about Nvidia’s economic moat.

Financial Strength

Nvidia is in outstanding financial health. As of October 2025, the company held $60.6 billion in cash and investments, as compared with $8.5 billion in short- and long-term debt. Semiconductor firms tend to hold large cash balances to help them navigate the cycles of the chip industry. During downturns, this provides them with a cushion and flexibility to continue investing in research and development, which is necessary to maintain their competitive and technological positions. Nvidia has more than enough of a cash cushion to handle downturns, and we struggle to foresee opportunities for the company to spend this excess cash other than stock buybacks. Nvidia’s dividend is virtually immaterial relative to its financial health and forward prospects.

Read more about Nvidia’s financial strength.

Risk and Uncertainty

We assign Nvidia a Morningstar Uncertainty Rating of Very High because of the nascent nature of the AI market. In our view, Nvidia’s valuation will be tied to its ability to grow within AI, for better or worse. Nvidia is an industry leader in GPUs used in AI model training, while carving out a good portion of demand for chips used in AI inference workloads (which involve running a model to make a prediction or output).

The biggest risk, in our view, is the pace of AI spending going forward. Nvidia prospered from exponential AI growth in recent years, but such spending comes from a handful of customers, and they all have an incentive to eventually optimize, if not reduce, their investments over time. Within these AI buildouts, we also think that tech leaders will turn to in-house chips for at least a portion of their workloads. Google’s TPUs and Amazon’s Trainium and Inferentia chips were designed with AI workloads in mind. Diversification is also possible, and among existing semis vendors, AMD is quickly expanding its GPU lineup to serve these cloud leaders.

We also foresee geopolitical risk and uncertainty, most notably with US restrictions that have prevented Nvidia, at various times, from selling its AI products into China.

Read more about Nvidia’s risk and uncertainty.

NVDA Bulls Say

• The AI infrastructure opportunity is massive, and Nvidia foresees $3 trillion to $4 trillion of annual AI infrastructure spending by 2030.
• Nvidia’s data center GPUs and Cuda software platform have established the company as the dominant vendor for AI model training and inference.
• Nvidia is expanding nicely within AI, not just supplying industry-leading GPUs but also moving into networking, software, and services to tie these GPUs into even more powerful clusters.

NVDA Bears Say

• Nvidia’s customers are a handful of the largest tech companies in the world, and they all have an incentive to eventually diversify away from Nvidia to some extent.
• AI infrastructure spending has been impressive, but revenue and use cases are less certain, perhaps raising doubts that there is a good return on investment in AI that might lead to a spending downturn at some point in the future.
• Geopolitics has entered the AI space, most notably limiting Nvidia’s AI opportunities in China.

This article was compiled by Jillian Moore.

This article was generated with the help of automation and reviewed by Morningstar editors.
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