I.Executive Summary
NVIDIA designs the graphics processors (GPUs), networking and software that most of the world's AI data centers are built on. Revenue rose from $27.0 billion in fiscal 2023 (the year to January 2023) to $215.9 billion in fiscal 2026, and net income from $4.4 billion to $120.1 billion. In the second quarter of fiscal 2027 (to 26 July 2026) revenue was $96.2 billion, up 106% on a year earlier, of which Data Center was $89.0 billion. Management guides the third quarter to $108.0 billion and has given a preliminary expectation of roughly 70% revenue growth in fiscal 2028.
At $228.38 the shares trade at 24.5× consensus EPS for fiscal 2027 (the year to January 2027, half complete) and 14.6× fiscal 2028. Those are moderate multiples for the growth on offer, but they rest on earnings at a record level, driven by an AI build-out whose duration nobody can know. NVIDIA's own history includes a 56% fall in EPS in fiscal 2023.
NVIDIA is the best business in the AI supply chain, but it sells into a capital-spending cycle. If fiscal 2028 consensus earnings arrive and simply hold, today's multiple gives a low-double-digit annual return; the risk is that the cycle turns before then.
Our illustrative five-year P/E projection holds today's 24.5× P/E on fiscal 2027 consensus EPS and takes the fiscal 2027–fiscal 2028 consensus as Years 1–2. Because the business is cyclical and earnings are at a record, the base case then holds EPS flat at the fiscal 2028 consensus rather than using analysts' 65%-a-year long-term figure; the bear and bull cases let EPS slip or grow 3% a year, with exit multiples 15% lower or higher. That gives Year-5 prices of $298 (bear), $385 (base) and $483 (bull), against today's $228.38: about +11.0% a year in the base case (+5.5% to +16.2%). Discounted at 10% a year, the base case is worth $239 today, +5% versus the price. Holding fiscal 2028 consensus for three years after a 68% jump is itself a demanding assumption (Section IX). *All values are Pathos's illustrative estimates, not price targets or recommendations.
II.Business Overview
What it sells. Data Center platforms (GPUs and accelerated-computing systems such as the Blackwell and newly shipping Vera Rubin generations, plus networking and software) account for almost all revenue: $89.0 billion of the $96.2 billion in the July 2026 quarter (92.5%, Pathos calculation). The rest comes from gaming, professional visualization and automotive chips.
Who buys it. Management splits Data Center customers into hyperscale cloud providers ($49 billion of revenue in the July quarter, per the earnings call) and "ACIE": AI clouds ("neoclouds"), industrial and enterprise customers. The company cites hyperscaler capital spending of nearly $800 billion in 2026 and $1.3 trillion in 2027 for the top five. These are management's figures, not ours.
How it makes it. NVIDIA is fabless. Its 10-K describes reliance on outside foundries (principally TSMC) and on memory and packaging suppliers. Management said supply would remain a bottleneck at least through the end of fiscal 2028.
Economics in one line. Gross margin has run at 71–75% since fiscal 2024, and operating margin was above 60% in each of the last two fiscal years, extraordinary for a hardware company. They reflect a software-like position: the CUDA software ecosystem plus complete systems.
III.Share Price & Valuation Multiples
Price as of Nasdaq close, 30 Sep 2026 · Fundamentals: FY2026 10-K and Q2 FY2027 Form 10-Q| Metric | Value | Basis |
|---|---|---|
| Share price | $228.38 | Close, 30 Sep 2026 |
| 52-week range | $164.27 – $236.54 | Finviz, 30 Sep 2026 |
| Market capitalisation | $5.50T | 24.10B shares (10-Q cover, 21 Aug 2026) × $228.38 |
| Enterprise value | $5.47T | + $33.4B debt − $62.5B cash and investments (StockAnalysis) |
| P/E, trailing 12 months (GAAP) | 28.9× | StockAnalysis; TTM GAAP EPS $7.91 includes investment gains |
| P/E, FY2027 consensus | 24.5× | $9.31, 51 analysts (Yahoo Finance) |
| P/E, FY2028 consensus | 14.6× | $15.68, 53 analysts |
| EV / EBITDA (TTM) | 27.3× | StockAnalysis |
| Price / sales (TTM) | 18.2× | TTM revenue $303.0B |
| Price / book | 24.1× | Equity $229.0B at 26 Jul 2026 |
| Dividend | $1.00 a year (0.44%) | StockAnalysis; last ex-date 10 Sep 2026 |
The trailing figures understate how fast earnings are moving: consensus has fiscal 2027 EPS up 95% and fiscal 2028 up a further 68%. Revisions have run upward. Fiscal 2028 consensus was $12.71 ninety days ago and is $15.68 today (Yahoo Finance). For context only, not an input to our work, the mean analyst price target compiled by StockAnalysis was $327.70 (61 analysts).
IV.Five-Year Financial Record
Source: NVIDIA Forms 10-K; FY2027 first half ($177.8B) = Q1 ($81.6B) + Q2 ($96.2B), per the Form 10-Q for the quarter ended 26 Jul 2026. GM = gross margin.
| US$ millions, FY to late Jan | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Revenue | 26,914 | 26,974 | 60,922 | 130,497 | 215,938 |
| Growth | 61.4% | 0.2% | 125.9% | 114.2% | 65.5% |
| Gross profit | 17,475 | 15,356 | 44,301 | 97,858 | 153,463 |
| Gross margin | 64.9% | 56.9% | 72.7% | 75.0% | 71.1% |
| Operating income | 10,041 | 4,224 | 32,972 | 81,453 | 130,387 |
| Operating margin | 37.3% | 15.7% | 54.1% | 62.4% | 60.4% |
| Net income | 9,752 | 4,368 | 29,760 | 72,880 | 120,067 |
| Diluted EPS (US$) | 0.39 | 0.17 | 1.19 | 2.94 | 4.90 |
| Operating cash flow | 9,108 | 5,641 | 28,090 | 64,089 | 102,718 |
| Capital expenditure | (976) | (1,833) | (1,069) | (3,236) | (6,042) |
| Free cash flow | 8,132 | 3,808 | 27,021 | 60,853 | 96,676 |
Two features stand out. First, the step-change: revenue grew eightfold in three years, and margins rose with it, because demand ran ahead of supply. Second, fiscal 2023 is a reminder that this is a cyclical industry. Revenue was flat, gross margin fell eight points, and EPS fell 56%. Our projection does not model a repeat (Section VIII).
Bars: quarterly revenue and net income, US$ billions. Line: trailing P/E = closing share price at quarter-end ÷ trailing-12-month diluted EPS (sum of the last four quarters; fiscal Q4 derived as full-year minus nine-month figures). EPS and share counts are restated for the 4-for-1 (July 2021) and 10-for-1 (June 2024) stock splits, matching split-adjusted prices. Sources: Form 10-Q/10-K data via SEC XBRL company facts; Yahoo Finance price history. Hover over a quarter for exact values.
Total tangible book value, US$ billions = shareholders’ equity minus goodwill and other intangible assets, at quarter-end. Per-share values in the tooltip use period-end share counts where tagged on the balance sheet, otherwise the cover-page count reported a few weeks after quarter-end. Source: balance sheets in Forms 10-Q/10-K via SEC XBRL company facts. Hover over a quarter for the components and the value per share.
V.Cash Conversion & Earnings Quality
NVIDIA turns earnings into cash well. Free cash flow was 81–91% of net income in each of the last five fiscal years (cumulative $196.5 billion of FCF against $236.8 billion of net income, Pathos calculation), and capital spending has stayed under 3% of revenue for the last three years because manufacturing is outsourced.
- Working capital is building. Receivables rose from $38.5B (Jan 2026) to $63.1B (Jul 2026) and inventory from $21.4B to $31.6B. Over the trailing twelve months free cash flow was $127.0B against GAAP net income of $192.9B (StockAnalysis), which is 66%.
- GAAP earnings include investment gains. Trailing pretax income ($229.7B) exceeds operating income ($197.6B) by about $32B. We use non-GAAP consensus, which excludes these gains, for the projection.
- Stock-based compensation was $6.4B in fiscal 2026 (3.0% of revenue). We treat it as a real cost; non-GAAP EPS excludes it, so consensus flatters cash earnings modestly.
VI.Balance Sheet Strength
| US$ millions | Jan 2024 | Jan 2025 | Jan 2026 | Jul 2026 |
|---|---|---|---|---|
| Cash and equivalents | 7,280 | 8,589 | 10,605 | 22,443 |
| Total debt | 9,709 | 8,463 | 8,468 | 33,366 |
| Inventory | 5,282 | 10,080 | 21,403 | 31,575 |
| Accounts receivable | 9,999 | 23,065 | 38,466 | 63,059 |
| Goodwill | 4,430 | 5,188 | 20,832 | 21,125 |
| Shareholders' equity | 42,978 | 79,327 | 157,293 | 228,984 |
The balance sheet is very strong. Debt rose by about $25B in the July quarter (from $8.5B at 26 April), an amount NVIDIA can easily carry from one quarter's cash flow, and net cash including investments is about $29B. Goodwill quadrupled in fiscal 2026, reflecting acquisitions (we have not analysed them). The main balance-sheet question is working capital, not leverage.
VII.Capital Allocation & Dilution
| US$ millions | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Share repurchases | 0 | 10,039 | 9,533 | 33,706 | 40,086 |
| Dividends paid | 399 | 398 | 395 | 834 | 974 |
| Stock-based compensation | 2,004 | 2,709 | 3,549 | 4,737 | 6,386 |
| Diluted shares (M) | 25,350 | 25,070 | 24,940 | 24,804 | 24,514 |
- Buybacks of $93.4B over fiscal 2023–2026 cut the diluted share count by 3.3%. That is well above the $17.4B of stock compensation over the same years, so the shares are being shrunk, not merely held flat. NVIDIA says it returned a record ~$26B in the July 2026 quarter.
- Insider selling has been heavy. Form 4 filings summarised by Finviz show director Mark Stevens selling several blocks of more than a million shares each in late summer 2026 (for example 1.2 million shares on 2 Sep at $223.33 and 1.37 million on 18 Sep at $219.73). Founders and directors selling is common at NVIDIA, and it is not by itself a signal, but it is worth knowing.
VIII.Five-Year P/E Projection (Illustrative)
Method. Today's price divided by consensus EPS for fiscal 2027 (year to January 2027) gives the current P/E of 24.5×. We take fiscal 2027 and fiscal 2028 consensus EPS as Years 1 and 2 in every scenario, grow EPS at a stated annual rate in Years 3–5, and apply an exit P/E to Year-5 (fiscal 2031) EPS. The base case holds today's P/E; the bear and bull cases use multiples 15% lower and higher and growth 3 points lower and higher. We compare the resulting Year-5 price with today's price as an annualized return, and discount it at a 10% required return to a present value. With the multiple held, the base-case return is simply EPS growth from Year 1 to Year 5.
| Input | Value | Type and basis |
|---|---|---|
| Share price | $228.38 | Source: Nasdaq close, 30 Sep 2026 |
| Year 0: FY2026 EPS | $4.77 non-GAAP $4.90 GAAP | Source: company results (Section XIV). Non-GAAP shown because consensus is on that basis |
| Trailing P/E | 47.9× 46.6× GAAP | Calculation: price ÷ FY2026 EPS. Shown for reference, not applied (see below) |
| Year 1: FY2027 consensus EPS | $9.31 | Source: Yahoo Finance, 51 analysts (range $9.01–$10.10), 30 Sep 2026 |
| Year 2: FY2028 consensus EPS | $15.68 | Source: Yahoo Finance, 53 analysts (range $9.80–$18.75); +68.4% on Year 1 |
| Current P/E (applied) | 24.5× | Calculation: price ÷ Year-1 consensus EPS (the fiscal year already under way) |
| Analysts' 5-year EPS growth | 64.8% a year | Source: Finviz "EPS next 5Y", 30 Sep 2026 |
| EPS growth, past 5 years | 95.3% a year | Source: Finviz "EPS past 5Y". Not used: reflects the AI step-change from a low base |
| EPS growth, Years 3–5 | Bear −3% · Base 0% · Bull +3% | Assumption. Cyclicality cap (see note): base holds EPS at the FY2028 consensus; bear and bull ±3 points |
| Exit P/E on Year-5 EPS | Bear 20.9× · Base 24.5× · Bull 28.2× | Assumption: current P/E −15% / held / +15% |
| Required return (present value) | 10% a year | Assumption |
Why today's forward P/E, not the trailing one. Fiscal 2026 EPS ($4.77 non-GAAP) is already a year out of date: fiscal 2027 is half complete, with non-GAAP EPS of $4.09 in its first two quarters ($1.87 + $2.22). The trailing P/E of 47.9× therefore overstates what the market pays for current earnings, and holding it would imply a base Year-5 price of about $751. We hold the 24.5× the market pays on fiscal 2027.
Year-by-year EPS
| US$ per share | Y0 FY2026A | Y1 FY2027E | Y2 FY2028E | Y3 FY2029E | Y4 FY2030E | Y5 FY2031E |
|---|---|---|---|---|---|---|
| Bear EPS | $4.77 | $9.31 | $15.68 | $15.21 | $14.75 | $14.31 |
| Base EPS | $4.77 | $9.31 | $15.68 | $15.68 | $15.68 | $15.68 |
| Bull EPS | $4.77 | $9.31 | $15.68 | $16.15 | $16.63 | $17.13 |
| Growth, Years 1–2 (consensus) | +95% | +68% | ||||
| Growth, Years 3–5 | Bear −3% · Base 0% · Bull +3% | |||||
Year-5 price and implied return
| US$ | Bear | Base | Bull |
|---|---|---|---|
| EPS growth, Years 3–5 | −3% | 0% | +3% |
| Year-5 EPS (FY2031) | $14.31 | $15.68 | $17.13 |
| Exit P/E | 20.9× | 24.5× | 28.2× |
| Year-5 price | $298 | $385 | $483 |
| vs. today's price of $228.38 | +31% | +68% | +112% |
| Implied annual return (5-yr CAGR) | +5.5% | +11.0% | +16.2% |
| Present value at 10% a year | $185 | $239 | $300 |
| Present value vs. today's price | −19% | +5% | +31% |
IX.Return vs. Today's Price
Pathos illustrative Year-5 (fiscal 2031) price range, with each scenario's implied annual return. Red line: today's price. Dashed green line: the base-case Year-5 price discounted at 10% a year.
At $228.38 the base case implies about +11.0% a year over five years, with +5.5% in the bear case and +16.2% in the bull case, before a dividend yield of about 0.44%. Discounted at a 10% required return, the base-case Year-5 price is worth $239 today, +5% versus the price. Put the other way: holding today's P/E, a 10% annual return needs Year-5 EPS of about $14.99, which means EPS could fall about 1.5% a year in Years 3–5 after the consensus years and still deliver 10%. The projection is close to our hurdle only because fiscal 2028 consensus is already 68% above fiscal 2027; the result is very sensitive to that single estimate, whose range runs from $9.80 to $18.75.
X.Superinvestor Holders (Dataroma)
Which of the portfolio managers that Dataroma tracks own NVDA, according to their latest 13F filings? The figures below come only from Dataroma’s NVDA ownership page and activity page.
Source: Dataroma · retrieved 30 Sep 2026 · 13F period Q2 2026 (holdings at 30 Jun 2026)The table shows 7 of the 18 Dataroma-tracked holders: those with more than 5% of their portfolio in NVDA, sorted by the US$ value of the holding, largest first.
| Superinvestor | % of portfolio | Shares | Value (US$m) | Recent activity | 13F period |
|---|---|---|---|---|---|
| Chase Coleman - Tiger Global Management | 9.34% | 11,198,773 | 2,240.8 | Reduce 6.77% | Q2 2026 |
| Duan Yongping - H&H International Investment | 6.58% | 6,280,675 | 1,256.7 | Reduce 54.63% | Q2 2026 |
| Mairs & Power Funds | 8.64% | 4,707,792 | 942.0 | Reduce 1.12% | Q2 2026 |
| Polen Capital Management | 6.86% | 3,978,446 | 796.0 | Reduce 3.07% | Q2 2026 |
| John Armitage - Egerton Capital | 6.61% | 3,417,950 | 683.9 | Add 27.77% | Q2 2026 |
| Lee Ainslie - Maverick Capital | 5.52% | 3,056,784 | 611.6 | Reduce 3.72% | Q2 2026 |
| Jensen Investment Management | 5.81% | 1,197,487 | 239.6 | Reduce 26.63% | Q2 2026 |
Dataroma shows 18 tracked superinvestors with a position at 30 Jun 2026. The largest weight belongs to Chase Coleman - Tiger Global Management, at 9.34% of the manager’s reported portfolio. Dataroma also shows full exits in Q2 2026: Daniel Loeb - Third Point (Sell 100%); Steven Check - Check Capital Management (Sell 100%).
XI.Key Risks for Value Investors
The AI capital-spending cycle
Revenue depends on a small group of hyperscalers and AI clouds spending at unprecedented rates. If returns on that spending disappoint, or capacity overshoots, orders can fall faster than costs. Fiscal 2023 showed how fast NVIDIA's EPS can halve.
Customer concentration and custom chips
The largest buyers are also designing their own accelerators. Broadcom's AI chip revenue reached $16.7B in its July quarter, up 221% (see our Broadcom note). Each custom chip that gets deployed is a GPU that NVIDIA does not sell.
China and export controls
The current outlook assumes no Data Center compute revenue from China. Further U.S. or Chinese restrictions could cut off other markets too, or force write-downs of inventory built for China.
Supply chain concentration
Leading-edge wafers come principally from TSMC in Taiwan, alongside scarce advanced packaging and high-bandwidth memory. Disruption in Taiwan would hit NVIDIA directly.
Working capital and earnings quality
Receivables and inventory have risen faster than revenue in 2026, and GAAP profit includes investment gains. If customers stretched payment terms, cash flow would weaken before earnings did.
Expectations and multiple
At $5.5 trillion the market already discounts years of growth. The projection holds the forward P/E. A cyclical de-rating, as in 2022, would cut returns well below even the bear case.
XII.Advice to Management
Pathos's long-term owner principles judge management by the per-share value it builds over many years, not by quarterly results. Applied to NVIDIA's figures in this note, we would offer the following recommendations.
Repurchase only below a stated estimate of value
NVIDIA spent $93.4 billion on buybacks in fiscal 2023–2026, $40.1 billion of it in fiscal 2026, at prices set on record earnings from a capital-spending cycle. Repurchases help continuing owners only when the shares cost less than a conservative estimate of their worth, so we would ask the board to publish the value framework it uses and to slow purchases when the price rests on peak-cycle profits. Adding $25 billion of new debt while returning a record ~$26 billion in the July 2026 quarter blurs that discipline; buybacks should come from surplus cash, not borrowing.
Count stock compensation as the cost it is
Stock-based compensation reached $6.4 billion in fiscal 2026 and rose every year from $2.0 billion in fiscal 2022, yet the non-GAAP EPS that management and analysts emphasise leaves it out. Paying people in shares is still paying them. We would lead with earnings that include stock pay and report buybacks net of the shares issued to employees, so owners can see the true reduction in the share count (3.3% over four years).
Set limits on working capital before the cycle sets them
Receivables rose from $38.5 billion to $63.1 billion and inventory from $21.4 billion to $31.6 billion in the six months to July 2026, and trailing free cash flow fell to 66% of net income. NVIDIA's EPS fell 56% in fiscal 2023, the last time demand paused. We would recommend disclosed limits on customer credit and inventory relative to sales, so a slowdown releases cash rather than producing write-downs.
Keep investment gains out of operating results
Trailing pretax income exceeds operating income by about $32 billion, largely because of gains on investments. Gains of this kind are market-driven and can reverse. We would show them separately in every headline figure and explain the purpose and risks of the investment portfolio, including any positions in customers.
Communicate over years, not quarters
Management guides each quarter precisely and has already given a preliminary view of roughly 70% revenue growth for fiscal 2028. Detailed near-term targets invite decisions made to meet them. We would put more weight on multi-year capacity, returns on capital and per-share value, and less on next quarter's number.
Opinion, not advice. These recommendations are Pathos's opinion, based on long-term owner principles and the figures in this note; they are not investment advice.
XIII.Conclusion
NVIDIA has the economics of a toll road on AI: 75% gross margins, cash conversion above 80%, net cash and a shrinking share count. The value question is not quality but duration. Consensus already has earnings rising 68% in fiscal 2028, to about $15.68 a share, and an industry history of sharp cycles argues against extrapolating growth beyond that.
Pathos view (illustrative). Taking consensus at face value and holding today's 24.5× multiple, the shares offer about +11.0% a year in the base case (Year-5 range $298–$483), and the base case is worth about $239 today at a 10% required return, roughly today's price. That is a fair price for an exceptional business, not a margin of safety. We would become more interested if (a) the price fell enough that the bear case still cleared 10% a year, (b) evidence built that AI demand can hold earnings near fiscal 2028 levels beyond the current build-out, or (c) working capital normalised. This is not a recommendation to buy, sell or hold.
XIV.Sources & Notes
As-of dates. Share price, market capitalisation and all price-based multiples use the Nasdaq closing price of $228.38 on 30 September 2026. Consensus estimates, the 52-week range and analysts' long-term growth estimate are as retrieved on 30 September 2026. Annual figures are from Forms 10-K (via SEC XBRL data); the latest quarter is from the 26 August 2026 release and the 10-Q for the quarter ended 26 July 2026. Ratios, free cash flow and per-share adjustments are Pathos calculations.
- NVIDIA Corporation, Forms 10-K and 10-Q, via SEC XBRL company facts and Form 10-K for fiscal 2026: income statement, cash flow, balance sheet, share counts.
- NVIDIA Form 8-K, 26 Aug 2026, Exhibit 99.1 "NVIDIA Announces Financial Results for Second Quarter Fiscal 2027": Q2 revenue, Data Center revenue, margins, EPS, Q3 outlook; and the accompanying earnings call (26 Aug 2026; transcript via NVIDIA investor relations): hyperscale revenue, fiscal 2028 preliminary outlook, supply constraints, hyperscaler capex figures, capital returned.
- NVIDIA Form 10-Q for the quarter ended 26 Jul 2026 (filed 26 Aug 2026): balance sheet, quarterly revenue, share count.
- Yahoo Finance, NVDA analysis (retrieved 30 Sep 2026): FY2027–FY2028 consensus EPS, ranges, analyst counts, revisions; FY2026 non-GAAP EPS.
- Finviz, NVDA (retrieved 30 Sep 2026): analysts' five-year EPS growth estimate, 52-week range, insider transactions (Form 4).
- StockAnalysis, NVDA statistics (retrieved 30 Sep 2026; data from S&P Global Market Intelligence): close, trailing ratios, cash and investments, debt, TTM cash flow, dividend, mean price target.
- SEC XBRL company facts (SEC EDGAR XBRL API, retrieved 30 Sep 2026): quarterly revenue, net income and diluted EPS from Forms 10-Q and 10-K (fiscal Q4 derived as full year minus nine months), and quarter-end equity, goodwill, intangible assets, preferred stock and shares outstanding. Used for the quarterly charts in Section IV.
- Yahoo Finance, NVDA daily price history (retrieved 30 Sep 2026): split-adjusted quarter-end closing prices for the trailing P/E line.
- Dataroma, NVDA superinvestor ownership page and activity page (retrieved 30 Sep 2026): ownership count, rank, % of all portfolios, hold price, holders, % of portfolio, shares, value and recent activity for 13F period Q2 2026 (holdings at 30 Jun 2026). 13F data are filed up to 45 days after quarter-end and cover long US-listed positions only.
Not verified or not used: segment revenue other than Data Center for the latest quarter; the identity and share of NVIDIA's largest customers; the composition of the fiscal 2026 acquisitions behind the goodwill increase; Q3 FY2027 results (due around 18 Nov 2026).