With a 19.8% gain in one month, AI capital is almost exclusively chasing Nvidia.
Nvidia rose 19.8% over the past month, with most of the gains concentrated around the August 26 earnings report. The following day, the stock surged another 8% intraday to $225.61, approaching its 52-week high of $236.26 again. In comparison, the iShares Semiconductor ETF rose only 0.9% over the same period. Despite Nvidia being a significant component, the fund's overall performance was nearly flat, indicating that AI capital this month was highly concentrated on Nvidia alone.
AMD and Intel each gained about 10% over the past month, only half of Nvidia's increase, while Broadcom fell 0.5%. If this were a broad-based rally across the semiconductor sector, other chip stocks should have been revalued accordingly. In reality, the capital only rewarded Nvidia, which most directly validates the demand for AI infrastructure.
$96.2 Billion in Revenue Again Raises the Ceiling for AI Demand
Nvidia's fiscal 2027 second-quarter revenue doubled year-over-year to $96.2 billion, surpassing market expectations of $92.1 billion. Adjusted earnings per share were $2.22, also exceeding the $2.09 forecast. This marks the company's fifth consecutive quarter of exceeding expectations. Data center revenue reached $89.02 billion, a 117% increase year-over-year, while the non-GAAP gross margin rose to 75%.
What truly propelled the stock further was the guidance. The company expects fiscal 2027 third-quarter revenue to reach $108 billion, excluding data center computing revenue from China. Management also provided an outlook for a 70% revenue growth in fiscal 2028. Jensen Huang stated that actual demand far exceeds 70%, and the constraint on growth is not orders but supply capacity.
Purchase commitments prepared for Vera Rubin production surged from $119 billion last quarter to $279 billion, primarily for securing memory supply. This provides visibility into future demand but also signifies that the company is making a substantial upfront bet on the continuation of the AI capital expenditure cycle.
A $304.73 Target Price Remains Attractive, But Position Sizing is More Crucial at High Levels
The average Wall Street target price is $304.73, with 58 analysts giving Buy or Strong Buy ratings, and only three holding Neutral or negative views. The long-term bullish thesis remains intact. However, Nvidia's current price-to-earnings ratio stands at 42.29x, with a market capitalization of approximately $5.49 trillion and a Beta of 2.215, indicating both valuation and volatility significantly higher than the broader market.
The article's conclusion is not to sell off entirely or aggressively chase the stock at highs. Investors with substantial gains may consider trimming their positions back to their original target allocation, reducing concentration risk while maintaining exposure to the long-term AI theme. Investors with insufficient exposure are better off waiting for pullbacks to add in phases, maintaining a moderate position size. Moving forward, it will be crucial to monitor not only whether the stock can hold its post-earnings gains but also whether the $279 billion in supply commitments can be smoothly converted into revenue over the next few quarters.
