Key Takeaways
- Tom Lee from Fundstrat maintains Nvidia remains undervalued, noting the P/E ratio continues shrinking despite extraordinary earnings expansion
- The chipmaker delivered Q2 revenue of $96.2B, representing 106% year-over-year growth, with adjusted EPS of $2.22 surpassing projections
- Forward guidance calls for approximately $108B in revenue for the upcoming quarter, reflecting robust AI infrastructure appetite
- Blue Zone Wealth Advisors expanded its Nvidia holdings by 21.4% during Q2, with a position now valued at approximately $25.9M
- Wall Street consensus stands at “Moderate Buy” with an average target price of $322.61; shares opened Friday at $227.98
Tom Lee, Fundstrat’s Head of Research, remains steadfast in his optimistic outlook on Nvidia (NVDA). Despite the stock’s impressive run and exceptional quarterly results, Lee maintains the shares are trading at attractive levels.
“What really jumps out is Nvidia’s valuation remains remarkably modest,” Lee explained during a CNBC interview. “You’re seeing massive upward revisions. The share price hasn’t matched that pace. The P/E ratio just keeps getting smaller.”
Shares of NVDA began Friday’s trading session at $227.98. Over the past year, the stock has traded between $164.07 and $236.54, with the company commanding a market capitalization of $5.52 trillion.
Nvidia disclosed Q2 revenue reaching $96.22 billion, marking a 105.9% increase from the same period last year. Earnings per share landed at $2.22, exceeding Wall Street’s consensus forecast of $2.09 by thirteen cents.
Compared to last year’s EPS of $1.05, the year-over-year earnings expansion becomes strikingly evident.
Management also projected roughly $108 billion in revenue for the ongoing quarter. Such robust forward-looking statements have reinforced bullish sentiment among Wall Street analysts.
Fundstrat characterized Nvidia’s triple-digit revenue expansion as “absolutely remarkable.” In a research note dated August 26, the firm suggested Nvidia’s 2028 revenue projections “could propel shares toward fresh record highs.”
Institutional Interest Accelerates
Blue Zone Wealth Advisors boosted its Nvidia stake by 21.4% during Q2, elevating its holdings to 129,666 shares worth approximately $25.9 million. Nvidia now represents 4.5% of the firm’s investment portfolio, ranking as its seventh-largest position.
Additional institutional players expanded their positions as well. Longfellow Investment Management increased its stake by 47.9% in Q2. Both Spurstone Advisory Services and Phillip James Consulting initiated new positions during the quarter. Collectively, institutional investors and hedge funds control 65.27% of Nvidia’s shares outstanding.
The Street’s consensus price target currently stands at $322.61, supported by 48 Buy ratings, two Strong Buy ratings, and four Hold recommendations.
Capital Returns and Insider Transactions
Nvidia’s board greenlit an $80 billion stock buyback authorization in May. Additionally, the company announced a quarterly dividend of $0.25 per share, scheduled for distribution on October 1 to shareholders on record as of September 10.
Conversely, company insiders divested roughly $410.4 million in stock during the preceding 90 days. Director Stephen C. Neal offloaded 15,500 shares at an average price of $215.73 in early June. Director Mark A. Stevens sold 885,000 shares at $210.17 in mid-June.
Rosenblatt Securities established the Street’s highest price objective on Nvidia 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, with a PEG ratio of 0.41 and a beta coefficient of 2.23.
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