Nvidia Stock Looks Cheap Right Now, but Here's 1 Reason It Could Actually Be Expensive
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Nvidia is experiencing a margin contraction in its recent quarters, with gross margins falling from previous highs. While still maintaining impressive margins around 73%, the company's cost of revenue growth is outpacing revenue growth. Management expects margins to stabilize in the low 70s and potentially rebound to mid-70s in fiscal year 2026. Analysts remain optimistic, projecting earnings per share growth of nearly 48% in the same period.
March 25, 2025 | 9:00 am
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Margin contraction could impact Nvidia's current valuation, with potential risks if earnings do not meet analyst expectations. Current forward P/E ratio of 26 might shift if gross margins continue to decline.
Margin contraction and potential earnings variability could create short-term stock price uncertainty. Analysts expect a margin rebound, but actual performance will be critical.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100