Key Points
Nvidia has gained a reputation for exceeding its own guidance.
Data center revenue has been steadily growing, up almost 15% year over year each quarter over the last year.
Nvidia is expected to report Q4 earnings on Feb. 25. Guidance will be key.
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Nvidia (NASDAQ: NVDA) isn't some hidden-gem stock. Plenty of individual investors, as well as institutions and mutual funds, own it.
Yet sometimes the best stock to pick is the one you already know. Nvidia stock has done nothing this year. There's a good reason to think that's about to change.
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Image source: Nvidia.
The company has continued to grow sales, led by its data center segment. Over the last year, it has grown data center revenue by 14% each quarter on average. Management has guided investors to expect total revenue growth of 14% again in fiscal Q4, compared with Q3. Nvidia is scheduled to report its fiscal fourth-quarter 2026 results on Feb. 25.
Even with continued growth expectations, investors haven't been buying Nvidia stock this year. Share prices are down about 2% year to date, and the stock now trades at a forward price-to-earnings (P/E) ratio of about 23. That's in line with the overall market for a company with massive ongoing growth.
Nvidia CFO Colette Kress has repeated several times that Nvidia sees artificial intelligence (AI) infrastructure spending of between $3 trillion and $4 trillion by 2030. She stated, "The scale and scope of these buildouts present significant long-term growth opportunities for Nvidia."
I predict that investors will start to see the value in the business, along with the stock's very reasonable valuation, when the company reports earnings on Wednesday, Feb. 25. That should justify a stock price well above the market's average multiple.
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Howard Smith has positions in Nvidia and has the following options: short March 2026 $175 calls on Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
