Nvidia Weekly Investor Briefing: Outperforming the Index Amid Global Shocks

Nvidia reported first-quarter revenue of forty-four-point-one billion dollars. That number came after the company completely halted sales in China, proving global demand for its AI hardware is more than capable of absorbing geopolitical shocks. As we discussed last week, our long-term assessment of Nvidia hinges on its ability to transition from a hardware provider to an ecosystem operator. This week’s data reinforces that trajectory. The stock has appreciated eighty percent since April of last year, reflecting a market that is finally catching up to the scale of this transformation. But looking at stock price alone is a short-term game.

We need to look at the engine underneath. The financials for Q1 2026 show sixty-nine percent year-over-year revenue growth. Net income hit eighteen-point-eight billion. The guidance for next quarter is even more aggressive—projecting seventy-eight billion dollars, which implies seventy-seven percent growth. Now, here’s the turn. While revenue soared, profit margins compressed, falling from fifty-seven percent down to forty-three percent. This wasn't a surprise—it reflects higher expenses as the company scales at a pace we’ve rarely seen. The key is that earnings-per-share still grew twenty-six percent. That’s operational leverage.

This is all happening inside a sector that is itself exploding. The market for AI-related capital expenditure is expected to grow by fifty to sixty percent this year alone. That’s the tailwind. The competitive advantage is the moat. Nvidia’s CUDA platform, NVLink, and its networking infrastructure are now a thirty-one billion dollar annual business. That’s larger than most semiconductor companies, and it’s just the software and interconnects holding the ecosystem together. It makes their full-stack AI infrastructure incredibly sticky. When ninety-one percent of your sales come from the data center segment, that ecosystem lock-in is what you are optimizing for.

So what is the long-term risk? It’s not a scrappy competitor building a slightly faster chip. The risk is concentration. A few hyperscale customers—the Googles, the Amazons, the Microsofts—are driving the majority of this growth. They are both Nvidia’s biggest customers and its biggest long-term threat. They have the capital and the incentive to build their own custom silicon, or ASICs, for AI workloads. The calculus is simple: if you spend tens of billions on chips, at what point does it become cheaper to design your own? This is the central tension we will be tracking for the next decade. In 2045, will we look back at this as the moment the cloud giants began to vertically integrate, cutting out the middleman?

Or will we see that the complexity of general-purpose AI required a dedicated platform provider, turning Nvidia into the foundational layer for the entire digital economy? For now, the moat is deep enough. The forward P/E ratio has normalized to around twenty-four, which is reasonable for this level of growth. The risks are real, but they are ten-year problems. The opportunity is happening right now. Our assessment remains unchanged. We reiterate our Buy rating on Nvidia. We are setting a twelve-month price target of two hundred and thirty dollars, reflecting continued dominance and margin recovery. The real story here isn't about a cyclical peak in AI spending.

It’s about the creation of a new utility—and Nvidia is selling the power plants.