By Daniel Foelber
Publication Date: 2026-03-03 22:00:00
Nvidia (NVDA 1.29%), Alphabet, Apple, Microsoft, Amazon, Meta Platforms, and Tesla collectively form the “Magnificent Seven,” a group of seven leading tech-focused companies that make up roughly a third of the S&P 500 (^GSPC 0.94%).
However, as of market close on Feb. 17, each Magnificent Seven stock was down more than the S&P 500 year to date. Microsoft is selling off in lockstep with broader declines among software stocks. And investors are concerned that hyperscalers like Amazon are overspending on artificial intelligence (AI).
Here’s why Nvidia has what it takes to continue outperforming the S&P 500 and lead the Magnificent Seven in 2026.
Image source: Getty Images.
Nvidia’s blowout results
On Feb. 25, Nvidia delivered jaw-dropping fiscal 2026 earnings and provided excellent guidance. The chip giant generated a record $215.94 billion in revenue — converting more than 55% of sales into $120.07 billion in net income. It also raked in $96.58 billion in free cash flow (FCF), which was plenty to cover $41.1 billion in stock repurchases and dividends.
Based on $4.90 in fiscal 2026 diluted earnings per share, $3.94 in diluted FCF per share, and a stock price at the time of this writing of $186.69, Nvidia is trading at 38.1 times earnings and 47.4 times FCF. That sounds expensive, but it’s actually quite cheap for a company that just grew earnings by 66.7% year over year and is guiding for $78 billion in first-quarter fiscal 2027 revenue with 75% gross margins, which would…