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Why I’m Doubling Down on Nvidia Stock Hand Over Fist
24/7 Wall St. • • business
Key Points:
- NVIDIA shares dropped 8.32% in a week amid AI slowdown concerns, but the author continues buying, citing the company's central role in AI development through 2030.
- Q2 FY2027 results showed $96.22 billion revenue, up 105.8% YoY, with strong margins (75% gross, 60.4% operating) and a 101.5% return on equity; management forecasts $108 billion revenue in Q3 and 70% growth for fiscal 2028 despite supply constraints.
- NVIDIA’s balance sheet is strong with low debt (debt-to-equity 0.073), high interest coverage (503x), and $21.34 billion free cash flow in the quarter; the company returned $26 billion to shareholders via buybacks and dividends.
- The author prefers NVIDIA over competitors AMD and Broadcom due to NVIDIA’s dominant platform absorbing AI orders, high margins, and significant purchase orders from major hyperscalers and AI cloud providers.
- Key risk involves circular financing and large supply obligations tied to AI cloud partners and frontier AI labs, but the author remains confident due to robust hyperscaler capex and cloud backlog, viewing current valuations as a bargain.
