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This Month's Exclusive Article
NVIDIA Price Pullback? Don’t Count on It, Business Is AcceleratingBy Thomas Hughes. Posted: 5/21/2026. 
Key Points
- NVIDIA reported accelerating sequential and year-over-year revenue growth driven by AI and data center demand, with strong guidance for fiscal Q2 2027.
- The company raised its annual dividend 25-fold to $1 per share and added an $80 billion share buyback authorization, signaling management's confidence in future earnings.
- Analyst price targets point to roughly 50% upside from NVIDIA's pre-release close, while institutions holding 65% of the stock continue accumulating shares at a 3-to-1 pace.
- Special Report: Elon’s “Hidden” Company
Investors and traders hoping for a post-earnings pullback in NVIDIA’s (NASDAQ: NVDA) shares may be disappointed. Not only were the results aligned with the company’s strong trend of acceleration, but the market rarely moves exactly as expected when everyone is looking for the same outcome. NVIDIA’s stock has often pulled back after earnings, but past performance is no guarantee of future price action. NVIDIA Fires on All Cylinders as AI Flywheel AcceleratesThe primary takeaway from the company's earnings release is that NVIDIA’s business continues to fire on all cylinders, driven by AI and data center demand. The results showed sequential and year-over-year (YOY) acceleration and outperformance, along with strong guidance for fiscal Q2 2027. Key details include continued strength in data center demand and GPUs, as well as emerging momentum in CPUs and other non-data center businesses.
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The likely result is that positive feedback loops continue to strengthen, as seen across other AI infrastructure names, further driving demand for NVIDIA’s products and services at every level. Among the signals investors should note is the increase in capital returns. The company has raised its dividend payment by 25X to $1 annually while increasing its buyback authorization by $80 billion. The move highlights the company’s fortress-like financial position and management’s confidence in future results. Balance sheet highlights also reflect the company’s aggressive acquisitions and investments, with cash down $40 billion, or 75% YOY. But that is the worst that can be said. Even so, cash is up nearly $3 billion, or 30%, sequentially, to more than $13.5 billion, and should continue rising each quarter barring additional acquisitions. The capital return story is not the main attraction; the trend is what matters. NVIDIA has established itself as a dividend grower and is now expected to increase its payout annually. The company is more than capable of doing so. The payout ratio remains low, below 15%, while earnings hypergrowth is forecast to continue for at least a few more quarters and then maintain a solid double-digit pace for years afterward. Share buybacks are even more substantial, having reduced the share count by approximately 0.9% YOY, and are likely to continue, if not accelerate, over time. The new $80 billion authorization is enough to sustain the Q1 pace for about five quarters. NVIDIA Signals the Future of AI: Data Centers and Edge ComputingAnother important signal for investors is the shift in reporting segments. The company reorganized into two operating segments, Data Center and Edge, highlighting the technology revolution now underway. The change points to what computing may look like in the future: data center-driven AI and inference delivered through edge devices and the IoT. That includes robotics, autonomous vehicles, and industrial automation, areas in which NVIDIA has been heavily investing. Analysts have been slow to revise their targets, but the bullish trend is likely to continue. Activity leading up to the release included multiple reiterated ratings and price targets raised above consensus, and the results were clearly better than expected. The consensus forecast, which implies roughly 25% upside from the pre-release close, is up more than 70% YOY, with recent revisions pointing to the $350 level, or about 50% upside from the pre-release close. Undervalued NVIDIA Has Ample Upside PotentialA 50% upside still looks achievable for this market. While NVIDIA’s premium has been rebuilding, the 26X earnings multiple at which it traded before the release remains a discount, and the earnings outlook has improved. Looking ahead, assuming NVIDIA can grow in line with its outlook, the stock trades at only 6X the 2030 consensus earnings forecast, suggesting 300% to 400% upside is possible. And the sell-side forces remain favorable to investors. The institutions that own 65% of the stock, including more than 8,700 ETFs and mutual funds globally, have been accumulating at an aggressive $3-to-$1 pace, while short sellers remain on the sidelines. Although short interest in dollar terms has increased, that is simply a function of the stock’s higher price: short interest as a percentage of the float has been steady for many quarters. The immediate market response, which carried over from after-hours trading into the next day’s pre-market session, was muted. NVIDIA’s shares fell about half a percent and hovered near that level. The stock could decline further in coming sessions, but downside appears limited. Key support sits around the 30-day exponential moving average near $210, just above prior highs, and would likely spark a strong market response if it is tested. Catalysts for the next rally include upcoming releases from NVIDIA customers, including the four major hyperscalers and Oracle (NASDAQ: ORCL), which should confirm continued AI infrastructure spending. |
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