Nvidia's $500 Billion Backlog Fuels Bullish Sentiment Amid Capex Concerns

Nvidia's massive growth numbers have some investors concerned about its valuation and capital expenditures. However, despite worries about high capex spending and 'circular financing', Nvidia's backlog of $500 billion in combined bookings for 2025 and 2026 remains a key reason to buy the stock.

CEO Jensen Huang stated that the company is at the beginning of the AI boom, which has led to significant revenue growth. In the first quarter of fiscal 2027, Nvidia's revenue rose by 85% from year-ago levels, reaching $81.6 billion, and its net income increased by 211%. Despite these impressive numbers, Nvidia's stock does not trade at a premium.

Huang has reassured investors that they can 'buy at a discount', citing the company's P/E ratio of 30, which is barely above the S&P 500 average. This suggests that Nvidia's valuation is reasonable and its growth is likely sustainable.