Key Morningstar metrics for Nvidia

  • Fair Value Estimate: USD $190
  • Morningstar Rating: ★★★
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Very High

*All figures at 28 August 2025

What we thought of Nvidia’s earnings

Nvidia NVDA reported fiscal second-quarter revenue of USD $46.7 billion, up 56% year over year and ahead of guidance of USD $45.0 billion. Third-quarter guidance of USD $54.0 billion would represent 54% year-over-year growth. Results and guidance both exclude any H20 product revenue sold into China.

Why it matters: No surprise, but there is still tremendous demand for Nvidia’s artificial intelligence products with no signs of a slowdown. Revenue (or lack thereof) from China adds volatility, but we’re most impressed with the Blackwell Ultra rollout and strong demand from leading US cloud customers.

The bottom line: We raise our fair value estimate for wide-moat Nvidia to USD $190 from USD $170 and maintain our Very High Uncertainty Rating. Although we reduce and push out our estimates for China revenue, the increase in US supply leads us to boost our near- and medium-term growth rates.

  • Nvidia has steadily increased AI revenue by approximately USD $4 billion per quarter over the past eight quarters as new supply comes online. We’re encouraged that guidance points to a USD $7 billion boost in the third quarter, with the accelerating supply of Blackwell Ultra rack-scale products.
  • Shares sold off modestly after hours, likely because near-term revenue didn’t beat FactSet Consensus estimates by as much as in recent quarters, but we view this as a buying opportunity.

Long view: Nvidia believes the global AI market will grow at a 50% pace and has confidence in the buildout plans of its large customers. Even with our fair value increase, 50% growth in calendar 2026 would represent upside to our model and would be ahead of current consensus estimates.

  • Management expects cumulative data centre spending of up to USD $4 trillion over the rest of the decade, while Nvidia has captured about a third of such capital expenditures to date. We view these estimates as both reasonable and a sign that AI spending will not decline anytime soon.

Bulls say

  • The AI infrastructure opportunity is massive, as over USD $1 trillion of infrastructure is likely already deployed today and the company foresees up to USD $4 trillion more in spending through the rest of the decade.
  • Nvidia’s data center GPUs and Cuda software platform have established the company as the dominant vendor for AI model training and inference.
  • Nvidia is expanding nicely within AI, not just supplying industry-leading GPUs but also moving into networking, software, and services to tie these GPUs into even more-powerful clusters.

Bears say

  • Nvidia’s customers are a handful of the largest Tech companies in the world, and they all have incentive to eventually diversify away from Nvidia to some exten
  • AI infrastructure spending has been impressive but revenue and use cases are less certain, perhaps providing doubts that there is a good return on investment on AI that might lead to a spending downturn at some point in the future.
  • Geopolitics have entered the AI space, most notably limiting Nvidia’s AI opportunities in China.

*All numbers at 28 August 2025.

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Star Rating:Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.

Uncertainty Rating:Morningstar’s Uncertainty Rating is designed to capture the range of potential outcomes for a company. An investor can think of this as the underlying risk of the business. For higher risk businesses with wider ranges of potential outcomes an investor should consider a larger margin of safety or difference between the estimate of what a share is worth and how much an investor pays. This rating is used to assign the margin of safety required before investing, which in turn explicitly drives our stock star rating system. The Uncertainty Rating is aimed at identifying the confidence we should have in assigning a fair value estimate for a stock.Read more about business risk and margin of safety here.