nvidia: is value emerging before earnings?
Santa Clara, Monday, 26 May 2025.
investment circles are buzzing about nvidia’s potential as a value stock ahead of its earnings report. nvidia’s capacity to generate $180 billion in free cash flow annually by 2030 could lead to a valuation in the $6–9 trillion range. this projection hinges on a 25% revenue compound annual growth rate through 2030, coupled with free cash flow margins between 45–50%. such figures are conservative, hinting at even greater potential.
nvidia’s financial performance
Nvidia’s fiscal year 2025 showcased substantial financial achievements [1]. The company generated $130.5 billion in revenue and $72.9 billion in GAAP net income [1]. Its free cash flow reached $60.85 billion, marking a 125% year-over-year increase [1]. Nvidia’s gross margin stood at approximately 75% [1]. Furthermore, the company returned over $33 billion to shareholders through buybacks and concluded the year with $43.2 billion in cash [1]. These figures highlight Nvidia’s robust financial health and its capacity to generate significant returns.
market valuation and metrics
Despite strong financials, Nvidia’s valuation metrics present a mixed picture [1]. The stock trades at 45 times trailing earnings and 31 times forward earnings [1]. Its price/earnings to growth (PEG) ratio is roughly 0.68 [1]. These metrics suggest that while not traditionally cheap, Nvidia’s growth potential justifies a closer look [1]. As of May 25, 2025, Nvidia’s market capitalization is $3.2 trillion, placing it behind Microsoft ($3.25 trillion) and ahead of Apple ($2.92 trillion) [7]. This positioning reflects Nvidia’s significant, but fluctuating, presence in the market [7].
earnings expectations and market sentiment
Nvidia is set to release its fiscal first-quarter earnings report after the market closes on Wednesday, May 28, followed by a conference call [5][8]. Analysts anticipate earnings of 73 cents per share, a 19.7% increase year-over-year, and revenue of $43.2 billion, a 66.2% rise from the previous year [8]. Options traders are pricing in a potential 7% move in either direction post-earnings release [8]. Chuck Carlson, CEO of Horizon Investment Services, notes that all eyes are on Nvidia’s report, as the AI theme has been a major market driver with Nvidia at its center [5].
strategic positioning and competitive landscape
Nvidia’s vertically integrated structure, spanning silicon (Hopper, Blackwell) to software (CUDA, NeMo, cuDNN), provides a competitive edge [1]. The company is a key infrastructure provider for the global AI race, securing deals with governments worldwide [1]. However, Nvidia faces challenges, particularly in the Chinese market [4]. Due to U.S. export restrictions, Nvidia’s market share in China has dropped from 95% to 50%, with Huawei’s Ascend 910B chip emerging as a primary competitor [4]. Nvidia is developing a new Blackwell-based GPU for China, priced between $6,500 and $8,000, significantly lower than the restricted H20 [4].