I keep buying NVIDIA because every bearish argument I hear collapses the moment I open the earnings report. The fashionable one, that NVIDIA is either hoarding cash or bleeding out from China restrictions, is the loudest and the wrongest, and it keeps handing me chances to add to a position I plan to hold deep into retirement.
NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) trades today at $207.40, and the analyst target sits at $301.62. My conviction comes from the numbers underneath that gap.
The China Narrative Bears Cannot Let Go Of
In Q1 FY2027, NVIDIA shipped zero H20 compute products to China, down from $4.6 billion a year earlier. Revenue still came in at $81.615 billion, up 85.23% year over year, beating estimates by 3.16%. Data Center revenue alone was $75.246 billion, up 92%. Networking, the piece most people ignore, hit $14.800 billion, up 199%. Management then guided Q2 to $91.0 billion, again assuming no China Data Center compute revenue. A company that can absorb a multi-billion-dollar customer loss and still print those numbers does not have a demand problem.
The Cash Hoarding Claim Falls Apart
NVIDIA returned roughly $20.0 billion to shareholders in a single quarter through repurchases and dividends. The board added $80.0 billion in fresh buyback authorization on May 18, 2026, on top of $38.5 billion already remaining under the prior plan. Management told analysts they plan to return roughly 50% of free cash flow to shareholders in 2027. The quarterly dividend was raised from $0.01 to $0.25. FY2026 returns totaled $41.1 billion. This is not a company sitting on its wallet.
Why NVIDIA And Not The Obvious Alternatives
The efficiency numbers explain why I want NVIDIA reinvesting first and returning second. ROIC of 92.2%. Return on equity of 101.5%. Operating margin of 60.4%. Non-GAAP gross margin of 75.0%. Debt-to-equity of 0.073 and interest coverage above 500x. Free cash flow of $48.554 billion in one quarter.
Now compare the alternatives a bull on AI chips would reach for. Advanced Micro Devices (NASDAQ:AMD) trades at a trailing P/E of 179 and forward P/E of 76, with a return on equity of just 8.06%. Intel (NASDAQ:INTC) is worse on the fundamentals: trailing EPS of -0.6, return on equity of -2.91%, forward P/E of 118, and quarterly earnings down 71.7% year over year. NVIDIA trades at a forward P/E of 23. I am paying less for the future earnings of the category leader than I would for either challenger, and I get the ROIC gap on top.
The Real Risk
China export restrictions could tighten further, and NVIDIA has $119.0 billion in supply-related commitments plus $30.0 billion in multi-year cloud service commitments locked in. If AI demand ever softens, that inventory becomes a problem quickly. Reliance on TSMC for manufacture, assembly, packaging, and testing sits underneath everything.
What Keeps The Buy Button Active
Jensen Huang told analysts on the May 20, 2026 call that visibility into Blackwell and Rubin revenue reaches $1 trillion from 2025 through calendar 2027, with hyperscale CapEx forecast to exceed $1 trillion by 2027. OpenAI committed to 10 gigawatts of NVIDIA systems. Meta signed on for millions of Blackwell and Rubin GPUs on a multi-year basis. Huang called it “the largest infrastructure expansion in human history.”
Every quarter the bear thesis needs a fresh coat of paint. My conviction only needs the receipts.
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