Nvidia's Strong Earnings Can't Silence September Jitters

Nvidia, the dominant artificial intelligence (AI) enterprise, reported strong financial results for its fiscal 2027 second quarter. The company's revenue rose 106% year-over-year to $96.2 billion, while diluted earnings per share soared 128% to $2.46, both beating Wall Street estimates.

Shares of Nvidia are up 8% since the announcement on August 28, but history suggests that September could be a weak month for the stock. Over the past decade, the S&P 500 index has averaged a loss of 1.3% in September, and Nvidia's price has declined an average of 0.8% over the same period.

While the business continues to operate at full strength from a fundamental perspective, investors should be aware of the risk that AI infrastructure spending may cool sooner than expected. This could impact Nvidia's revenue and profitability. However, with a forward price-to-earnings (P/E) ratio of 23.9, Nvidia appears to be undervalued compared to the S&P 500 index.

The company's growth continues to be exceptional, with sell-side analysts predicting a 58% yearly increase in revenue between fiscal 2026 and fiscal 2029. Nvidia's supply-and-demand imbalance has also led to sustained pricing power, resulting in a 62% net profit margin in the second quarter.