Nvidia Just Delivered Spectacular News to Shareholders. Here's What You Need to Know.

Nvidia (NASDAQ: NVDA) has an established track record of beating earnings expectations over the past several quarters -- and the artificial intelligence (AI) chip giant kept that momentum going in the latest period. The company delivered record quarterly and full-year revenue, and revenue and profit for the quarter surpassed analysts' estimates.

This performance is thanks to the strength of Nvidia's graphics processing units (GPUs), or AI chips, as well as its expansion into a wide range of supporting products -- from networking equipment to its most recent foray into stand-alone central processing units (CPUs) for data centers. Customers may turn to Nvidia for all of their AI needs.

And this leads me to the spectacular news Nvidia delivered to shareholders in its quarterly and fiscal 2026 full-year report...

Image source: Getty Images.

Nvidia's story so far

Before diving in, though, let's take a quick look at Nvidia's story so far and its latest earnings numbers. As mentioned, Nvidia today is an AI giant, but that wasn't always the case -- the company originally was known for serving the gaming market with its GPUs. It still does, but AI has become Nvidia's biggest business in recent years. The company built this leadership by recognizing the opportunity early, designing its GPUs to suit the needs of AI, and entering the market before others.

All of this clearly worked out well for Nvidia, as its stock price has soared 1,300% over the past five years, following gains in earnings. And earnings momentum hasn't let up. Revenue in the fourth quarter soared 73% to $68 billion, surpassing the analyst estimate of just over $66 billion. Adjusted earnings per share came in at $1.62, higher than the $1.53 estimate. And full-year revenue advanced 65% to more than $215 billion. To put this into perspective, Nvidia's annual revenue totaled about $60 billion just two years ago.

The need for compute

Now, let's consider the news Nvidia delivered to shareholders during this latest report. The need for compute is translating into revenue growth -- and this should keep investment in Nvidia's products and services booming. Analysts' expectations for capital spending by cloud service providers this year have increased by $120 billion to almost $700 billion. These are companies such as Amazon and Alphabet, which build out AI infrastructure and then offer that capacity to their customers.

"Capex translates to compute," Huang said during the earnings call. "Compute with the right architecture translates to maximizing revenues, and compute equals revenues. Without investing in compute, there cannot be revenue growth. And that, I think, everybody understands."

Nvidia says the transition is underway, from traditional data center workloads to AI-powered ones, and this use of AI represents about half of the AI giant's long-term opportunity.

All of this suggests that, though Nvidia has seen strong growth so far, this momentum is far from over. In the earliest days of AI, we thought of GPUs as key tools for training models, and they still are, but as the technology becomes part of this new way of computing, its use may be widespread. So we're talking about a significant long-term revenue opportunity for Nvidia.

Nvidia's stock performance

Nvidia stock has disappointed investors in recent times as it only gained about 4% from the start of the year through the close of trading on Feb. 25. But, for investors looking for quality companies that have what it takes to perform over a period of years, this should be seen as an opportunity.

This has led to a significant drop in Nvidia's valuation.

NVDA PE Ratio (Forward) data by YCharts

So, right now, you can get in on this top tech stock at bargain levels, and even if it doesn't take off immediately, it's well-positioned to advance over the long run as AI-based computing becomes the norm. It's also important to keep in mind that companies are starting to apply AI more and more to real-world problems, and analysts estimate that the entire AI market could surpass $2 trillion in just a few years. Nvidia is one of the companies that's most likely to benefit from that.

All of this means that Nvidia's spectacular news makes the stock a fantastic one to buy at today's levels and hold onto as this exciting story unfolds.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.