Is NVIDIA a purchase?

Nvidia (NASDAQ: NVDA) Just delivered another record-breaking quarter, raising its stock by 5% and tying it Microsoft As the most valuable public trading company at the time of writing. Despite the results, problems continued due to the company's political pressure and tariff uncertainty. Let’s break down the latest performance of chip manufacturers and explore the implications of current challenges for long-term investors to determine whether NVIDIA is buying, holding or selling.

Image source: NVIDIA.

In the first quarter of fiscal 2026, NVIDIA's revenue was $44.1 billion, up 69% from the previous quarter and 12% from the previous quarter, and 4Q4FY2025. NVIDIA's total net revenue was $18.8 billion, and while the company was associated with $450 million in charges, companies related to new products rose 26% year-on-year and 26% year-on-year.

As for the focus, the company's data center revenue soared to $39.1 billion in the quarter, a 73% increase from the previous year. Management also announced that it will work with others to build factories in the U.S. to produce artificial intelligence (AI) supercomputers, which may alleviate some tariff issues.

In addition, NVIDIA continues to return capital to shareholders, with a quarterly dividend of $0.01 per share, and repurchased $14.1 billion worth of shares in the quarter. It is worth noting that management has spent $40 billion on stock buybacks over the past 12 months, down just 0.8%.

Although Nvidia continues to break the record, it encountered the above-mentioned geopolitical strife this quarter. On April 9, the U.S. government suddenly asked NVIDIA to obtain a license before shipping the H20 chips to China. question? H2O has been deeply embedded in the company's listing strategy and has earned $4.6 billion in revenue this quarter. Nvidia holds $4.5 billion worth of unsold bags, and cannot ship an additional $2.5 billion order until the restrictions come into effect.

Once seen as a reliable pillar of growth, the Chinese market now represents the main wildcard of NVIDIA. With the lockdown of U.S. companies, NVIDIA warns that losing the AI ​​accelerator market close to this nearly $50 billion will be beneficial to foreign competitors.

Another twist came after NVIDIA released its first-quarter earnings: Federal courts blocked Donald Trump from using emergency powers to impose widespread tariffs. While the Trump administration’s decision to appeal may ease trade tensions, it highlights how quickly trade policy can shift and brake unrivaled growth to Nvidia.

Despite the company's geopolitical headaches, Nvidia continues to innovate. CEO Jensen Huang said its Blackwell chips were designed for large-scale AI workloads - the company's next big breakthrough. To support its growth, the company launched Blackwell Ultra and Nvidia Dynamo in the latest quarter, aiming to power the next generation of inference AI models. Huang said:

The global demand for NVIDIA AI infrastructure is very strong. The generation of AI inferred tokens has soared tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world see AI as infrastructure – just like electricity and the internet – Nvidia stands at the center of this profound transformation.

To support the development of its Blackwell product, NVIDIA announced in April that it will build and test the chips in Arizona and its AI supercomputers in Texas. Given the company's tariff issues, it is impossible coincidence that management chooses the United States as the location to make the latest products.

Going forward, management expects revenues of $45 billion in the next quarter, another 2%. It is worth noting that the outlook includes the ongoing H20 restrictions being hit by $8 billion, which will continue to affect gross margins. When the estimated $8 billion loss is excluded, management believes it will receive a "70% mid-term" gross margin late in fiscal 2026, which will match its 75% gross margin in the previous fiscal year.

Given the rapid rise in NVIDIA shares, it still trades to earn 45 times. However, the company has grown significantly to that premium with a median value of three years, about 63.

As a clear leader in the fast-growing world of artificial intelligence, NVIDIA continues to break new ground, most recently its next generation Blackwell chips and AI supercomputers. For growth investors seeking exposure to transformative AI technologies, NVIDIA remains a compelling long-term investment, even in the case of geopolitical risks and increased valuation rates.

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Collin Brantmeyer has positions in Microsoft and Nvidia. Motley Fool has a place and recommends Microsoft and Nvidia. Motley Fools suggest the following options: January 1, 2026, Microsoft $395 Phone, Short January 2026, Microsoft $405 Phone. Motley Fool has a disclosure policy.

Is NVIDIA a purchase? Originally published by Motley Fool