Nvidia's $500 Billion Backlog Fuels Bullish Sentiment Amid AI Boom
Nvidia's massive backlog of $500 billion in combined bookings for 2025 and 2026 is a significant reason to be bullish on the company, despite concerns about high capital expenditures and circular financing.
The chip giant's CEO Jensen Huang stated that the world is at the beginning of an AI boom, and investors should be 'very happy' because they can buy Nvidia stock at a discount. The company's stock sells at a P/E ratio of 30, which is barely above the S&P 500 average of 29.
In the first quarter of fiscal 2027, Nvidia reported revenue of $81.6 billion, an 85% increase from year-ago levels, leading to net income of $58.3 billion, a 211% annual increase.
The 'circular financing' concerns are largely due to Nvidia's investments in its customers, which some may see as a way to artificially inflate growth. However, these investments can also pay off longer-term and ease concerns about credit accessibility.