Nvidia (NVDA) Maintains Market-Beating Pace as AI Boom Soothes Thorny Trade War

Nvidia’s (NVDA) Q1 results landed like a bombshell last week, shattering expectations with $44.1 billion in revenue, marking a 69% surge year-over-year, driven by relentless demand for its AI and data center chips. From fueling Microsoft’s (MSFT) AI workloads to posting record-breaking gaming sales, NVIDIA’s dominance is staggering.

Even with a $4.5 billion hit from U.S. export restrictions on its China-bound H20 chips, the company didn’t waver, posting numbers that still left Wall Street stunned. And yet, NVDA stock lingers near last year’s levels, even as profits soar, making it a compelling bet for market-beating returns.

AI and Data Centers at the Core of NVIDIA’s Triumph

NVIDIA’s data center business has been the beating heart of its success, raking in $39.1 billion in Q1, up 73% from last year. NVIDIA is literally crafting the infrastructure for the AI era. On the earnings call, CEO Jensen Huang described the Blackwell NVL72 AI supercomputer as a “thinking machine” now in full production, with Microsoft deploying tens of thousands of Blackwell GPUs to process 100 trillion AI tokens. I mean, that’s the kind of scale that makes competitors sweat. From cloud giants like Amazon Web Services (AMZN) to sovereign AI projects in Saudi Arabia, NVIDIA’s chips are the backbone of a global AI race.

The wins keep piling up. Strategic moves, such as partnering with HUMAIN to build AI factories in Saudi Arabia, demonstrate NVIDIA’s ambition to integrate its technology into every corner of the globe. Huang’s vision of AI as critical infrastructure (like roads or power grids) does not exist in the realm of hype but is instead more like a blueprint for the future. With data center revenue making up 89% of Q1’s haul, NVIDIA’s grip on AI’s plumbing is only getting stronger.

Gaming and Networking: Hidden Gems Shining Bright

While AI steals the spotlight, NVIDIA’s gaming and networking segments are quietly flexing their muscles. Gaming revenue hit a record $3.8 billion, up 42% year-over-year, thanks to the GeForce RTX 50 series. And despite reports of some hardware glitches, NVIDIA’s quick response with replacements kept gamers loyal, cementing its brand as the gold standard for high-performance graphics.

Networking is another unsung hero, with Q1 revenue soaring 64% quarter-over-quarter to $5 billion. NVIDIA’s Spectrum-X Ethernet solutions are becoming the go-to for data centers handling massive AI workloads. Think of it as building the highways for AI’s data deluge. The company’s ability to scale these complementary businesses demonstrates that it’s not just a chipmaker, but a full-stack powerhouse with multiple growth engines firing simultaneously.

Weathering the China Challenge Like a Pro

You’d expect a $4.5 billion charge from U.S. export restrictions on NVIDIA’s H20 chip for China to throw a wrench in the works, but NVIDIA barely flinched. The company still beat Wall Street’s $43.3 billion revenue forecast, even with a $2.5 billion sales loss in China. CFO Colette Kress noted on the call that customer demand remains “firm,” and NVIDIA’s already exploring compliant chip designs to tap China’s $50 billion AI market. Without the H2O hit, adjusted gross margins would have reached 71.3%, proving the core business remains a profit juggernaut.

This resilience is almost surreal. Imagine taking a multi-billion-dollar punch and still delivering a knockout quarter. Huang’s comments about China as a “springboard to global success” signal that NVIDIA is not backing down, with active lobbying for export licenses to regain its footing. The fact that growth still smashed expectations despite this setback made NVIDIA’s Q1 feel like a masterclass in navigating adversity.

NVDA Stock Remains Attractively Priced

Despite NVIDIA’s adjusted EPS soaring quarter after quarter (coming in at $0.81 in Q1, up from $0.61 a year ago), the stock hasn’t maintained the same pace over the past year, resulting in valuation multiple compression. At 34x this fiscal year’s expected EPS, I view the stock as quite attractively priced.

With consensus estimates forecasting EPS growth of 43% this year and 34% next, driven by AI and data center tailwinds, today’s multiple doesn’t really feel rich. I believe these trends could persist for years, given NVIDIA’s dominance in AI infrastructure (think robotics, autonomous vehicles, and enterprise AI), which could power substantial gains from current share prices.

Is NVDA a Buy, Sell, or Hold?

Despite trading near its highs, Wall Street remains extremely bullish on NVDA stock. NVIDIA features a Strong Buy consensus rating, with 36 analysts currently bullish, four neutral, and just one bearish. NVDA’s average stock price target of $173.19 indicates significant upside potential of nearly 23% over the next twelve months.

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Nvidia’s Moment to Shine

NVIDIA’s Q1 report was nothing short of explosive, showcasing dominance across AI, gaming, networking, and more, all while mitigating headwinds such as the China export restrictions. Trading at just 34x forward earnings, the stock appears to be a steal, given its expected 43% EPS growth this year and the powerful, long-term momentum behind AI. NVIDIA isn’t just part of the tech revolution; it’s leading it, setting the standard for the entire industry. Investors dragging their feet risk missing out on what could be a once-in-a-generation opportunity to ride a true market giant to new heights.