NVIDIA Stock Surges on AI Infrastructure Demand, but Is It Still Undervalued?
NVIDIA (NVDA) has made significant strides in AI infrastructure following Zayo Group's announcement to build over 8,000 miles of new long-haul fiber using NVIDIA's AI technology. This move aims to support growing AI data traffic and comes as the stock experiences a 7-day share price return of 11.56% and a year-to-date return of 18.59%. With a market value of around $5.4 billion, investors are left wondering whether the recent AI wins have already priced in most of the story.
The most popular narrative surrounding NVIDIA pegs fair value at $280 per share, above its recent close of $223.96, suggesting that the stock is undervalued. This calculation is based on rapid AI-driven revenue expansion, high margins, and a premium future profit multiple. However, this view faces pressure points, including potential slowdown in demand from large cloud customers or overly optimistic expectations for AI infrastructure spending.
NVIDIA's data center revenue now accounts for over 70% of its total revenue and is growing rapidly. While some may be concerned about risks to this narrative, others see significant upside ahead.