$NVIDIA(NVDA.US)

NVIDIA: AI Growth Still Dominates, but Expectations Are the Risk

NVIDIA remains the strongest AI-chip franchise, but the setup is becoming more balanced. Its latest reported Q1 FY2027 delivered $81.6bn revenue (+85% YoY), with Data Center up 92% to $75.2bn and a strong 74.9% gross margin. Q2 guidance of $91bn implies another 12% sequential jump. (NVIDIA Newsroom⁠)

Fundamentally, FY2026 revenue reached $215.9bn (+65%), net income $120.1bn and EPS $4.90. The concern is margin compression: FY2026 gross margin fell to 71.1% from 75.0%, while operating expenses rose 41%. (NVIDIA Newsroom⁠)

Technically, NVDA closed at $208.48 on August 24, down 2.9%, with RSI around 22—oversold but still bearish. (MarketWatch⁠) Valuation around 24–25x forward earnings is actually more attractive than AMD and Broadcom, making NVDA the strongest risk/reward among major AI semiconductors. (Yahoo Finance⁠)

Option strategy: Prefer covered calls 21–35 DTE, targeting $225–$230 strikes, ~0.20–0.30 delta. Avoid selling immediately before earnings because implied volatility is elevated. After earnings, premium collection becomes more attractive if NVDA holds above $200.

View: BUY/HOLD. Fundamentally #1; valuation increasingly reasonable, but earnings expectations leave little room for disappointment.