NVIDIA Stock Surge Amid U.S.-China Trade Relief

NVIDIA shares spike 18.7% following trade truce; investors debate holding or selling. The sentiment shift boosts tech stocks significantly, but is valuation a concern?

Date: 03-06-2025

AI Rating: 8

**NVIDIA's Performance Overview**
NVIDIA Corporation has seen a remarkable gain of 18.7% over the past month, outperforming the broader Computer and Technology sector, which experienced a 6.9% increase. This surge is significantly influenced by improving sentiment surrounding U.S.-China trade relations, with recent tariff reductions alleviating fears of prolonged disruptions, which has buoyed market confidence across technology and semiconductor stocks.

**Data Center Demand Driving Growth**
A key highlight of NVIDIA's recent performance is its Data Center business, which accounted for a staggering 89% of total sales, bringing in $39.1 billion for the first quarter of fiscal 2026. This represents a 73% year-over-year growth and a 10% sequential improvement, driven by surging demand for AI-focused products. This substantial shift underscores NVIDIA's strong positioning in the rapidly evolving AI landscape. The company's adherence to innovation, particularly with cutting-edge GPU platforms, fosters optimism about its growth trajectory.

**Financial Health Amid Challenges**
Financially, NVIDIA's performance reflects resilience despite facing near-term geopolitical challenges, including expected revenue hits from export restrictions. In the first fiscal quarter of 2026, revenue surged by 69%, complemented by a non-GAAP earnings per share increase of 33%. The forward-looking guidance of $45 billion for the upcoming quarter, marking a 50% increase year-over-year, further underscores NVIDIA’s robust growth expectations. Wall Street's consensus estimates predict continued revenue and earnings growth into fiscal 2026 and 2027, affirming NVIDIA as a compelling long-term growth investment.

**Premium Valuation Insights**
However, investors should exercise caution, as NVIDIA's shares trade at a P/E multiple of 29.13, surpassing the sector's average of 25.52. This may indicate overvaluation amidst high expectations. The competitive landscape shows NVIDIA trading higher than AMD and Micron but lower than Broadcom, requiring astute monitoring of its market valuation relative to its peers.

**Conclusion: Hold on to NVIDIA**
In conclusion, NVIDIA’s formidable growth narrative, driven by its data center dominance and innovative product pipeline, warrants a hold stance from investors despite the current high valuation. The positive financial trajectory amid external challenges presents a compelling long-term investment opportunity for those willing to ride out the fluctuations stemming from geopolitical uncertainties and market corrections.

Stocks: NVDA AMD MU AVGO