Case study · Nasdaq: NVDA

NVIDIA

The hyper-grower. Revenue up 65% in a year at a scale no chipmaker has reached before. It shows why backward-looking ratios can understate a company, and why that cuts both ways.

Fiscal 2026 = year ended January 25, 2026. Source: NVIDIA Q4 FY2026 earnings release (8-K, Feb 25, 2026). Price: Oct 5, 2026 close.

Revenue
$215.9B
FY26 · +65%
Net income (GAAP)
$120.1B
FY26 · +65%
Diluted EPS (GAAP)
$4.90
FY26 · non-GAAP $4.77
Market cap
~$5.76T
at $238.90, Oct 5, 2026

How NVIDIA makes money

NVIDIA designs chips (GPUs) and the systems and software around them. Its chips are the main engine for training and running AI models. It doesn't own factories; manufacturing is outsourced.

Segment (FY2026)RevenueGrowthShare of total
Data Center$193.7B+68%~90%
Gaming$16.0B+41%~7%
Everything else~$6.2B~3%
The thing to notice GAAP gross margin was 71.1% for the year and 75% in Q4. Operating margin was about 60%. Margins this high usually mean customers have few good alternatives. They also attract competitors.

What investors watch

  • Guidance: for Q1 of fiscal 2027, NVIDIA guided to $78.0B of revenue, ±2%, while assuming no data center compute revenue from China. For a fast grower, the forecast often moves the stock more than the results.
  • Gross margin: any sign of margin pressure would suggest pricing power is fading.
  • Customer concentration: a large share of data center sales go to a handful of cloud giants. Their spending plans are watched closely.
  • Capital returns: NVIDIA returned $41.1B through buybacks and dividends in FY26, and added $150B to its buyback authorization in late September 2026.

Reading the valuation

On fiscal 2026 GAAP EPS of $4.90, the October price of $238.90 is a P/E of about 49×. That looks expensive. But:

  • Those earnings ended in January. NVIDIA has reported higher quarters since, so the trailing P/E on the latest 12 months is lower.
  • The forward P/E, based on expected earnings, is lower still. By early October 2026 commentators described it as near multi-year lows.

So is NVIDIA cheap? That depends almost entirely on one question: how long can this growth and these margins last? If AI spending keeps rising, today's price may prove modest. If customers cut orders, or competitors and in-house chips take share, earnings estimates could fall fast, and a "cheap" forward P/E would turn out not to be.

Scale effect At ~$5.8T, NVIDIA was about 8% of the S&P 500 in early October 2026. If you own an S&P 500 index fund, you already have a meaningful NVIDIA position.
Try it Open the DCF calculator with NVIDIA loaded. Drop the first-five-year growth rate from 25% to 10% and watch what happens to value per share.

Sources