NVIDIA Corporation (NASDAQ:NVDA) closed at $217.23 on October 15. The stock has returned 9.52% over the last six months, compared to a 15.4% return for the Insider Monkey Billionaire Index and 11.4% for the State Street SPDR S&P 500 ETF Trust.
NVIDIA designs the processors that most artificial intelligence work runs on. It is the largest company in the world by market value. It has also been one of the weaker performers among the companies that supply it. Over the past year, the stock rose 16.48%. Taiwan Semiconductor, which builds its chips, rose 43.10% over the same stretch. Micron, which supplies its memory, rose 360.14%. That is an odd result for the company at the centre of the story.
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Nothing Is Wrong With the Business:
Revenue in the most recent quarter was 105.9% higher than a year earlier, and earnings grew faster still. Growth usually slows as a company gets larger, because each new dollar has to be won against a bigger base. NVIDIA doubled anyway, which is not what scale normally allows.
Earnings outrunning sales is the part that matters more, because it means the cost of producing that revenue did not rise as fast as the revenue did. The expensive part of this business is designing the chip, and that is paid for once, however many are sold. The building is left to someone else. Operating margin runs at 66.24%.
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Where the Money Went Instead:
The memory makers were starting from much further back. The market prices their earnings as temporary even now, which left far more room to re-rate when artificial intelligence spending arrived than NVIDIA ever had. NVIDIA had already been repriced. The market worked out what the company was worth to this cycle earlier than it worked out what the cycle meant for everyone further down the chain.
There is a harder version of the same point. A supplier benefits whoever wins the processor race, while NVIDIA has to keep winning it. The customers designing their own chips are buying memory and manufacturing capacity either way.
What the Shares Cost Now:
The stock changes hands at 24.88 times what analysts expect next year, against 28.51 times the past year. Those two numbers sit close together, so the market is paying little more for next year’s earnings than for last year’s.
That is the quiet part of a year like this one. The earnings climbed far faster than the share price, so the multiple came down without anyone deciding the company was worth less.
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Conclusion:
The share price lagged because the market had already decided what NVIDIA was worth to this cycle, while it was still working that out for the companies behind it. That is a story about where expectations started rather than about the business, which grew several times faster over the period than the share price did. What has changed is the price relative to the earnings, and that is a better starting point than the one a year ago.
Market Sentiment:
NVIDIA Corporation was held by 285 hedge funds with a combined stake value of about $94.67 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 275 hedge fund holders with a cumulative investment value of around $83.89 billion in the previous quarter.
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This article is originally published at Insider Monkey.
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