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For the last few years, Nvidia (NVDA) has been ruling the AI accelerator market. However, the company seems to move further than that with its latest achievement as Nvidia has become the world's biggest data center Ethernet switching vendor in terms of revenue in Q1 2026, surpassing many established networking players.
The achievement was driven by the continuing increase in AI infrastructure spending both in hyperscalers, sovereign AI projects, and corporate settings. However, while investors usually focus on Nvidia's GPUs, networking turned out to be one of the fastest-growing parts of Nvidia's revenue. Now, the key question arises: can NVDA stock still provide any upside with the huge rise in the last few quarters and $5 trillion in market capitalization?
About Nvidia Stock
Nvidia (NVDA) is the world's top AI computing platform, graphics processing unit, networking hardware and software solutions provider. The company based in Santa Clara, CA, has evolved from being a maker of gaming chips to becoming a leader in AI infrastructure. The market capitalization of Nvidia amounts to about $5.1 trillion.
The shares of the company demonstrated remarkable performance in the last year, trading at $210 compared to a 52-week low of $142. NVDA stock grew almost 40% from its one-year low and substantially outperforming the broad-based S&P 500 Index ($SPX). Nvidia continues to be rewarded for its dominant market position in artificial intelligence, cloud computing, and accelerated computing infrastructure.
However, even with such a great market capitalization, Nvidia can still demonstrate very impressive growth rates that are rarely seen among mega-caps. NVDA stock currently trades at 24.4x forward P/E and 22.9x forward sales. Even though these multiples seem high in comparison to most semiconductor peers, they start looking pretty reasonable considering the company's growth, profitability, and dominant market position.
Price/earnings-to-growth ratio of 0.47 suggests that the growth rate is higher than the rate of the valuation expansion.
Nvidia Beats on Earnings
The latest quarterly report proved the power of the AI infrastructure cycle. In the fiscal Q1 2027, Nvidia demonstrated record-breaking revenue of $81.6 billion, which increased 85% year-over-year (YoY) and beat expectations. Adjusted EPS amounted to $1.87 while gross margins were extremely high at 75%.
As usual, the Data Center segment was the main driver of growth for Nvidia. Revenue rose to record $75.2 billion, increasing 92% YoY. Among that revenue, data center networking revenue skyrocketed 199% to a record $14.8 billion, which shows the rising importance of networking products along with GPUs.
This latest IDC report explains why. As per IDC, Nvidia's data center Ethernet switching revenue has grown almost 193% YoY to $2.1 billion in the quarter. The reason behind that is that Nvidia's Spectrum-X platform becomes widely adopted by hyperscalers constructing AI factories due to its tight integration of GPUs, networking, and software.
The management is positioning Nvidia as more than just a semiconductor company. The company's CEO Jensen Huang said that the current AI buildout is the biggest infrastructure expansion in history. Besides that, Nvidia provides the full platform consisting of compute, networking, software, and AI factories. Additionally, the company has announced another $80 billion of share repurchase authorization and increased the quarterly dividend to $0.25 per share.
What Do Analysts Expect for NVDA Stock?
Even though NVDA stock showed enormous appreciation, Wall Street still stays extremely optimistic towards the stock. The analysts continue to see Nvidia as one of the biggest beneficiaries of AI spending growth, especially due to the growing contribution of networking products to revenues and profits assigning a “Strong Buy” rating consensus.
The consensus price target currently stands at $303.71. Given the recent trading price of about $201, Nvidia's mean target price of $303.71 implies about 51% upside. The highest target price goes up to $500 while the lowest target is set at $180. The emergence of Nvidia as the world's biggest Ethernet switching vendor could be even more important than it looks like.
Nvidia is not only selling GPUs anymore. It dominates multiple layers of the AI infrastructure stack.
