Latest Developments:
Nvidia (NVDA) continues to show exceptional growth, with Q2 2025 revenues up 122% YoY and EPS up 168%, primarily driven by strong performance in the Data Center segment. Despite concerns about the sustainability of AI investments, Nvidia remains well-positioned due to ongoing GPU shortages and increasing demand for AI/ML infrastructure. The company expects strong growth to continue, with Q3 2025 revenue guidance of $32.5 billion and gross margins around 75%. However, operating expenses are expected to rise as Nvidia normalizes its margins.

Investment Case:
Nvidia benefits from a global GPU shortage and increasing AI/ML infrastructure demand, ensuring continued growth. Despite potential revenue loss from China due to geopolitical tensions and the normalization of operating margins, Nvidia’s strong market position and solid fundamentals suggest that the stock remains a sound investment. The company is not overvalued, even factoring in these risks, with a potential upside of 22% based on a discounted cash flow analysis.

Company's Valuation:
Nvidia’s valuation is not in bubble territory, despite the recent surge. Based on assumptions of continued AI market growth and the loss of China’s revenue by 2029, the company’s market capitalization could reach $3.6 trillion, with a target share price of $145, reflecting a 22% upside from current levels.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.