NVDA indicated that customer forecasts point to enough demand for its business to roughly double next year—in other words, grow by 100%.
But management is forecasting revenue growth of only 70% because the company does not believe the supply chain can keep up.
To be fair, the fact that NVDA and the entire AI industry are facing supply constraints is genuinely negative in one respect. They are simply unable to sell as much equipment as customers want to buy.
Supply shortages also contribute to higher input costs, particularly for memory, which will pressure NVDA’s profit margins over the next several quarters.
But there is a much more encouraging side to this story.
Excess demand gives suppliers like NVDA substantial pricing power that should eventually allow them to pass through higher input costs.
More importantly, the existence of significant unmet demand provides a cushion against any potential slowdown in the growth of AI spending.
Valuation still attractive
NVDA has been a holding of our American Resilience Model Portfolio since March 12, 2025, when it was added at around $116 per share amid fears of a demand collapse related to DeepSeek.
Investors at the time were panicking that the Chinese AI startup had just proved that AI models could be developed much more efficiently, implying weaker future demand for AI hardware.
With the benefit of hindsight, those concerns appear truly misplaced.
Although NVDA shares have nearly doubled since then, we believe the stock remains attractively valued, taking into account its growth trajectory, competitive position, and extraordinary free cash flow generation.
The latest NVDA results also lend support to our broader optimism toward AI-related stocks.
When it comes to AI, everyone fears overspending and overbuilding. After all, this is what burst the dotcom bubble in the early 2000s. Those scars remain etched in the market’s collective memory.
But NVDA’s latest results demonstrate that demand for AI is real and growing—and we may indeed still be quite early.
Why the opportunity remains
NVDA generated $96.2 billion of revenue in the latest quarter, up 106% from a year ago. Data Center revenue reached $89 billion, representing growth of 117%.
Management expects total revenue to rise again to approximately $108 billion in the current quarter.
These growth rates would be remarkable for a young company growing off a small base. NVDA is producing them with an equity market value of approximately $5 trillion and quarterly revenue approaching $100 billion.
The scale of the demand is difficult to overstate.
Capital spending by the five largest hyperscalers is expected to increase from nearly $800 billion in 2026 to approximately $1.3 trillion in 2027. Cloud industry backlog already exceeds $2 trillion.
Yet NVIDIA is also becoming less dependent on this relatively small group of technology giants….
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