Nvidia: A Dip, But Not a Dividend’s Embrace

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Nvidia, that purveyor of silicon dreams and, more recently, the engine of artificial sentience, has experienced a minor gravitational adjustment. A slippage, if you will, following the announcement of its quarterly earnings. Seventy-three percent revenue growth, a near-doubling of earnings per share—figures that, to the uninitiated, might suggest an ascent into the stratosphere. Yet, the market, that capricious lepidopterist, seems unimpressed. A curious phenomenon, isn’t it? To be spectacularly successful and yet…not quite enough.

The shares, stubbornly resisting a joyous leap, whisper a disquieting truth: that even the most dazzling growth can become expected, absorbed into the very fabric of valuation. It’s a bit like presenting a rare orchid to someone who already possesses a greenhouse full of them. Appreciation, naturally, diminishes.

Two shadows, subtly cast, seem to be at play. Firstly, the creeping suspicion that we may be approaching the apogee of this particular AI investment cycle. The market, a creature of anticipation, often prices in the future before it arrives, leaving little reward for those who arrive late to the party. Secondly, a sense that the stock, already burnished to a high sheen, had absorbed a considerable degree of optimism. A valuation, as they say, that has already accounted for a great deal of hope.

But does this temporary retreat offer a prudent opportunity for those of us who seek not merely growth, but a steady stream of income—a dividend, if you will—to accumulate shares at a more reasonable price? The question, as always, is more intricate than it appears.

Nvidia’s Proliferation: A Digital Bloom

The numbers, of course, are arresting. Sixty-eight point one billion dollars in revenue, exceeding expectations. A year-over-year growth rate of seventy-three percent – a figure that, were it applied to a more pedestrian enterprise, might warrant a parade. And earnings per share soaring ninety-eight percent. One might almost believe they were printing money—which, in a manner of speaking, they are.

The engine of this prodigious growth is, unsurprisingly, the data center segment, which expanded by a robust seventy-five percent. The demand for computing power, fueled by the insatiable appetite of artificial intelligence, is nothing short of exponential. As Nvidia’s founder and CEO, Jensen Huang, so eloquently put it, enterprise adoption of “agents” – those autonomous digital entities – is “skyrocketing.” A rather dramatic verb, don’t you think? One imagines these agents launching themselves into the digital firmament.

Equally noteworthy is Nvidia’s continued commitment to share repurchases—a rather substantial forty billion dollars over the past fiscal year. A clear signal, perhaps, that management believes its own stock remains undervalued. Or, more cynically, a clever way to manipulate earnings per share. The motivations, as always, are layered.

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A Cautious Appraisal: Two Shadows Lengthen

Despite the undeniably impressive results, two subtle dissonances emerge. Firstly, the deceleration of sequential growth in the data center segment. While still substantial, the twenty-two percent increase in the fourth quarter represents a slowdown from the previous quarter’s twenty-five percent. And the projected fifteen percent growth for the first quarter suggests a further moderation. The relentless upward trajectory, it seems, may be leveling off.

Secondly, the reduction in share repurchases. A mere four billion dollars in the fourth quarter, compared to seven point eight billion in the same period last year. A significant decrease, suggesting that management may be becoming less enthusiastic about its own stock. Or perhaps, simply exercising a degree of fiscal prudence. One wonders if they foresee a gathering storm.

Nvidia, without question, remains a formidable company with extraordinary momentum. But a valuation of thirty-eight times earnings, for a company operating in a cyclical industry, strikes me as…ambitious. A rather precarious perch, wouldn’t you agree? Like balancing a porcelain figurine on the head of a pin.

Should the stock price fall to levels that entice management to resume aggressive share repurchases, I might reconsider my position. After all, no one understands the intricacies of the product cycle better than Nvidia itself. Their share repurchases, therefore, offer a reasonable, if imperfect, indicator of the stock’s intrinsic value. A subtle semaphore, if you will.

Of course, discerning investors should consider a multitude of factors before investing in any stock. But Nvidia’s share repurchases, along with other pertinent data, are worth considering as part of a comprehensive analysis. A piece of the puzzle, if you will, in a rather complex and fascinating game.

Overall, I fail to perceive a sufficient discount in the current stock price to justify a purchase. The allure of Nvidia, while undeniable, remains…distant. A shimmering mirage on the horizon. A tempting prospect, perhaps, but one that requires further contemplation.

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2026-02-27 01:22