By Maham Fatima
Publication Date: 2026-10-09 13:25:00
A while ago, Nvidia (NASDAQ:NVDA) reported a quarter in which revenue more than doubled. Yet the stock’s valuation sits far below where it has spent the past five years. That’s an odd pairing, and it’s the reason the shares deserve a second look. Nvidia designs the processors and networking gear that fill the data centers where AI models are trained and run. Its customers include cloud providers, AI labs, and governments, and most of its sales come from that data center business. So is the lower multiple a bargain, or a hint that the best margins are already in the numbers? The answer depends on whether a new product cycle can sustain profitability.
A 75% Gross Margin on $89 Billion of Data Center Sales
Nvidia’s edge isn’t a single chip. It sells whole systems: CPUs, GPUs, and the networking that ties thousands of them together. In fiscal Q2 2027, Data Center revenue reached $89.0 billion, up 117% from a year earlier. Gross margin held at 75.0% on both a GAAP and non-GAAP basis, up about 2.5 percentage points year over year on the non-GAAP measure.
That pairing is the proof. Buyers with real alternatives push on price, yet Nvidia kept more of each sales dollar while selling far more of them. CEO Jensen Huang said demand is still accelerating, with several frontier AI labs now building in parallel rather than one lab driving the…
