By Trefis Team
Publication Date: 2026-08-06 12:08:00
The earnings multiple looks ordinary, but the sales multiple is where the real bet on margins sits.
NVIDIA (NVDA) sells complete AI systems now, not chips alone, and the market has priced it that way. At about $219 a share, roughly 7% below its 52-week high, it carries a premium to the S&P 500 on earnings, on sales and on cash flow. That premium is not the interesting question; what a buyer has to believe to justify it is.
The Earnings Multiple Is The Wrong One To Watch
At 33.4 times trailing earnings against 24.4 for the S&P 500, the premium looks ordinary. It is not. Those earnings rest on a margin the index has nothing close to, and that margin is the part that can move: 63% of revenue reaches net income, versus 13.0% for the market. What actually carries the bet is the sales multiple, 21.0 times revenue against 3.4: at that price you underwrite the margin, not the current level of earnings.
Systems, Sold Into A Widening Set Of Buyers
In fiscal Q1 2027 revenue was $82 billion, up 85% year over year, and the shape underneath that total matters more. Under the company’s new reporting split, hyperscale buyers, about half of data center revenue, grew 12% sequentially while the AI-cloud, industrial and enterprise group grew 31%. The more varied set of buyers is now the faster-growing one. Blackwell systems account for most of what ships, and the same architecture reaches…
