Key Morningstar metrics for Nvidia

  • Fair Value Estimate: $140
  • Morningstar Rating: ★★★
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Very High

What we thought of Nvidia’s Earnings

Nvidia NVDA reported fiscal first-quarter revenue of USD 44.1 billion, ahead of guidance and up 69% from the year-ago period. Second-quarter revenue guidance of USD 45 billion would represent 50% year-over-year growth. Both figures incorporate lost revenue from China due to US export controls.

Why it matters

We’re encouraged by Nvidia’s revenue growth despite being blocked from selling H20 products (custom-built for China’s artificial intelligence market). This caused a USD 4.5 billion inventory write-off and foregone revenue of USD 2.5 billion and USD 8.0 billion in the first and second quarters, respectively.

  • First-quarter data center revenue of USD 39.1 billion was up 73% year over year, as almost 70% of revenue came from Nvidia’s latest Blackwell products. Of this revenue, $4.6 billion came from H20 sold into China before the restrictions were enacted on April 9, 2025.
  • Nvidia’s gaming revenue was a bright spot, up 48% sequentially and up 42% year over year, as new gaming products based on the Blackwell architecture were well-adopted.

Nvidia geographic sales breakdown

Nvidia generated $9.0 billion, or 20%, of revenue in the first quarter from Singapore. Nvidia disclosed once again that several customers prefer to bill out of Singapore, but almost certainly ship Nvidia’s products to the rest of the world. This quarter, Nvidia made the important additional disclosure that 99% of its AI products (H100, H200, B200) billed out of Singapore are for orders from US-based customers. We think this disclosure might help to assuage some investor concerns that Nvidia’s revenue includes some hidden China business. Overall, we assume that such revenue, if it exists at all, is immaterial to our estimates or our view of the business.

Nvidia’s data center business recovery

Within data center, Nvidia saw a nice recovery in networking revenue, up to nearly USD 5 billion and up 64% sequentially and 56% year over year after a soft quarter of only USD 3.0 billion in the January quarter. We remain impressed with Nvidia’s ability to elbow out from GPU designs into networking gear. We suspect that Nvidia’s Ethernet business is boosted by its ability to bundle with its best-of-breed and hard-to-obtain GPUs, but the company now counts many large cloud vendors as key customers.

Long-term demand outlook for Nvidia

Thinking about long-term demand, US deals with Saudi Arabia and the United Arab Emirates for AI buildouts are promising for Nvidia and its AI peers. On the results call, CEO Jensen Huang discussed how “every country needs to build out AI infrastructure.” It’s hard to be pessimistic about AI when it appears to be emerging as an area of national security for leading countries worldwide. If we were to frame bullish scenarios for Nvidia, government demand will likely have to be a large part of the story as various countries support buildouts as a strategic imperative. In these bullish scenarios, however, this capacity needs to not only be built, but also fully utilized by developers in these regions.

The bottom line for Nvidia stock

We raise our fair value estimate for wide-moat Nvidia to USD 140 per share from USD 125 as Blackwell supply (and revenue) expanded faster than we anticipated and should support higher long-term AI revenue. We retain our Very High Morningstar Uncertainty Rating.

  • Shares rose about 5% after hours following the results and appear fairly valued, as we think the market was similarly impressed by Blackwell and calmed by Nvidia’s ability to grow despite China export controls.

Coming up for Nvidia

Nvidia expects revenue in the July quarter to increase about 3% sequentially, with modest growth across all segments. Growth would have been 14% sequentially and 77% year over year if Nvidia were allowed to sell USD 8.0 billion of H20 products into China as desired.

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Terms used in this article

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: The Morningstar Uncertainty Rating assesses business risk and our analysts’ ability to gauge Fair Value. Mark LaMonica discussed business risk in more depth in this article.