Nvidia: A Top Long-Term Portfolio Holding for High Margins and Innovation
Nvidia (NVDA) stands as a compelling long-term investment choice, primarily driven by its exceptional profit margins, according to veteran investor Louis Navellier.
Lucrative Margins
Nvidia's wide leadership in semiconductor innovation has enabled it to command premium pricing for years. The company's operating profit margins have consistently expanded, reaching 58.1% for the fiscal year ended Jan. 28, 2024. Analysts predict an operating margin of 67.5% for the previous year.
AI Leadership
Nvidia's powerful AI chips, including Hopper and Blackwell, have accelerated the trend of profit margin expansion. The company's continued leadership in AI infrastructure development is expected to drive further growth.
Analyst Skepticism
Despite its strong financial performance, Nvidia has not seen major upward revisions in its 2025 EPS estimates in over 60 days. Analysts have also noted a modest downward trend in the company's first quarter EPS expectations.
Valuation Premium
Compared to other AI stocks, Nvidia trades at a premium valuation with a forward price-to-earnings (PE) multiple of 29. This premium reflects the company's strong earnings growth and its leadership position in the AI industry.
Competition and Concerns
While Nvidia has a strong competitive advantage, some analysts, such as David Bahnsen, believe its earnings multiple estimates assume a lack of competition. However, the market recognizes the significant competition in the industry.
Conclusion
Despite some concerns, Nvidia remains a top pick for long-term investors. Its exceptional profit margins, AI leadership, and premium valuation make it an attractive investment opportunity for those seeking exposure to the growing AI market.