Shares of Nvidia (NVDA) continued to drift lower Friday following the company’s blockbuster earnings report, but the muted reaction has also made the stock appear increasingly attractive to analysts.
Nvidia shares fell around 1.2% to $216.26 in early trading after dropping 1.8% Thursday in the session immediately following earnings.
The decline came despite Nvidia once again surpassing Wall Street expectations and extending its remarkable streak of quarterly outperformance.
According to FactSet data, the latest report marked Nvidia’s 14th consecutive quarter of beating analyst expectations on both revenue and operating income.
The company reported first-quarter revenue growth of 85% year-over-year and guided for even faster growth in the current quarter.
Still, investors appeared hesitant to push shares materially higher after the stock’s enormous run over the past two years and its massive market valuation exceeding $5 trillion.
Valuation now seen as increasingly attractive
The post-earnings pullback has left Nvidia trading at a forward price-to-earnings ratio of just above 22 times, according to FactSet.
That compares with roughly 95 times for Intel and nearly 47 times for Advanced Micro Devices.
Analysts increasingly argue that Nvidia’s valuation no longer reflects the company’s growth profile and dominant position in artificial intelligence infrastructure.
The average Wall Street price target on Nvidia has now climbed to roughly $294, while approximately 93% of analysts covering the stock maintain Buy-equivalent ratings.
Wolfe Research senior analyst Chris Caso told CNBC that Nvidia delivered another strong “beat-and-raise” quarter, with both earnings and guidance surpassing expectations.
Caso said concerns remain around whether hyperscalers developing custom AI chips could eventually pressure Nvidia’s market share.
However, he noted that Nvidia continues adding major AI customers, including Anthropic, reinforcing the company’s momentum even as competition increases.
According to Caso, Nvidia now derives roughly half of its business from hyperscalers, while the remaining portion comes from sovereign AI projects, enterprises, and customers that rely on Nvidia’s integrated hardware-and-software ecosystem rather than building custom chips internally.
“We think the valuation, given the growth rate and the prospects ahead of them, is just unreasonable at this point when it’s trading at a discount to most everything else within AI.”
Analysts continue raising targets
Several Wall Street firms have continued lifting their price targets following Nvidia’s earnings report.
Needham raised its target to $270 from $240 while maintaining a Buy rating.
The firm pointed to continued strength in Nvidia’s Data Center segment and highlighted the company’s expanding opportunity in CPUs through its standalone Vera architecture.
Needham said Nvidia’s growing CPU business could potentially position the company to become the world’s largest CPU vendor, with visibility into roughly $20 billion in CPU revenue during fiscal 2027.
Earlier this week, analysts at Baird, Goldman Sachs, and Morgan Stanley also raised price targets following the earnings release.
Wall Street remains broadly optimistic that Nvidia will continue benefiting from the massive global buildout of AI infrastructure.
Major technology companies, governments, enterprises, and startups continue to spend aggressively on artificial intelligence systems, with Nvidia’s GPUs remaining the backbone of most large-scale AI training and inference workloads.
Even as competition from custom chips and alternative architectures grows, analysts largely believe the broader AI market is expanding quickly enough for Nvidia to maintain its leadership position for years ahead.
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