Nvidia Stock Soars on Reports of Scarce and Valuable Chips
Nvidia's stock price has surged in recent days due to reports of scarce and valuable chips. According to CNBC's Jim Cramer, Nvidia's chips are holding their value despite being scarce.
The scarcity thesis is backed by two supply-side narratives: an analysis by Beth Kindig that TSMC's N3 process wafer capacity is severely constrained, with major AI chip designers like NVIDIA and Google relying on the same node and rising prices reflecting the bottleneck. Bank of America also models hyperscaler capital expenditures to exceed $1.2 trillion over the next year, with the sector shifting from demand to supply constraints.
Nvidia's latest report confirms the scarcity thesis, with Q1 FY2027 revenue reaching a new company record at $81.615 billion, up 85.23% YoY and beating consensus by 3.16%. Non-GAAP gross margin held at 75.0%, up from 60.8% a year earlier, indicating pricing power created by supply trailing demand.
Nvidia's management guided Q2 FY2027 revenue to $91.0 billion, with 75.0% non-GAAP gross margin, excluding China Data Center compute revenue. The company has large commitments, including 10 gigawatts of systems for OpenAI and initial 1 gigawatt for Anthropic.
Nvidia's valuation is a topic of debate, trading at roughly 30.7 times trailing earnings and 22.8 times forward earnings. Analysts have a consensus target of $302.83, with 58 buy or strong buy ratings against 2 holds and 1 sell.