NVDA IC Memo | IWANNAVY LAB

Executive Summary & Action Plan

Verdict

BUY — Revenue doubled to $81.6B in four quarters. At $200, the stock trades at a clean discount to our $275 fair value.

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Price $200.09 | Market cap $4.85T | Target $275 | Upside +37.4% IWANNAVY Fair Value · price as of 2026-07-01 · Street consensus $301.62 (reference) — we are more conservative, allowing for multiple de-rating

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Abstract

NVIDIA's revenue doubled to $81.6B within four quarters while operating margin expanded from 60.8% to 65.6% and FCF margin tripled to 59.5% — an operating-leverage regime rarely seen at this scale. Data Center generates 93% of revenue, and the durable moat is the CUDA software ecosystem rather than the silicon itself: two decades of accumulated libraries raise switching costs against AMD and custom ASICs, while TSMC CoWoS packaging and HBM supply remain the binding constraints. Our fair value of $275 — the log-median of DCF ($285), EV/EBITDA ($275), and EV/FCF ($225) — implies +37.4% upside and sits deliberately below the $302 Street consensus to absorb multiple de-rating as growth decelerates. We rate the stock BUY with staged entries at $200 and $185, a stop at $168, and profit-taking at $275 and $340. Principal risks are hyperscaler capex deceleration, custom-ASIC substitution, and China export controls.

Action Plan

Enter at market, add at the $185 pullback, take profit at $275 (fair value) and $340 (bull).

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Risk/Reward 2.3:1 | Prob-weighted 12M return +31.1% (Bull 22% · Base 48% · Bear 30%) | Confidence: Medium

Last Four Quarters

Revenue has grown double-digit QoQ for four straight quarters. Over the same span, operating margin rose 60.8% → 65.6% and FCF margin 28.8% → 59.5%. Margins expand as the business scales — textbook operating leverage. Net margin reached 71.5% (incl. investment gains).

Metric	Q3'25	Q4'25	Q1'26	Q2'26
Revenue ($B)	46.7	57.0	68.1	81.6
Op margin	60.8%	63.2%	65.0%	65.6%
Net margin	56.5%	56.0%	63.1%	71.5%
FCF margin	28.8%	38.8%	51.2%	59.5%

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Revenue & Profit Mix

Data Center is 93% of revenue. COGS is only $20.5B — a 75% gross margin. Hardware with software economics. The income flow below overlays the current quarter (solid), prior quarter (dashed), and year-ago quarter (dotted): every node grew on both axes.

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Business Lines

Data Center (~93%): Blackwell/Rubin GPUs + networking + the CUDA stack. Must know — the real moat is CUDA ecosystem lock-in, not the chip. Twenty years of libraries raise switching costs against AMD and custom ASICs. Bottlenecks: TSMC CoWoS and HBM.
Gaming (~5%): RTX GPUs. Growth has slowed but it is a steady cash source. AI PCs are a mild tailwind.
ProViz & Automotive (~2%): Omniverse, robotics, DRIVE. Small today. The physical-AI optionality — the forward-looking axis.

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IWANNAVY Fair Value

Fair value is the log-median of three methods. It sits below the $302 consensus — we price in a modest de-rating of the 29x EV/EBITDA multiple. Even so, +37.4% remains.

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Thesis breaker: simultaneous hyperscaler 2027 capex freeze + CoWoS supply normalization + custom-ASIC share loss → fair value cut.

Catalysts & Risks

Catalyst	Timing	Impact	·	Risk	Prob	Impact
Q3'26 results · Rubin ramp	2026 H2	High	·	Hyperscaler capex deceleration	Med	High
Hyperscaler capex re-raise	Quarterly	High	·	Custom ASIC (TPU/Trainium) substitution	Med	Med
Physical AI / robotics expansion	2027+	Med	·	Geopolitics (China export controls)	Med	Med

References

NVIDIA Investor Relations — quarterly results · SEC EDGAR 10-Q

Note: segment figures are estimates (est.) based on public earnings releases; valuation assumptions are stated in the body. Quarterly P&L and margins are computed deterministically from market financial data.