Key Points

Nvidia occupies a central role in the surge of AI investments.
Revenue expansion is speeding up.
Gross margins have eased from their highest points.
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Nvidia (NASDAQ: NVDA) ranks as the world's most valuable firm and the sole entity exceeding $5 trillion in worth. Yet after a strong first-quarter earnings release, shares declined.

Here is an assessment of Nvidia stock developments and expectations ahead.

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Image source: Nvidia.

The $4 trillion prospect

Nvidia CFO Collette Kress noted the firm targets a $4 trillion market. Hyperscaler yearly outlays should surpass $1 trillion next year and reach $3 to $4 trillion by decade end, with Nvidia capturing a large share. "We hold strong positioning for an opportunity larger than any competing AI platform," she stated.

Data centers and AI facilities grow rapidly, with Nvidia components supporting most AI applications and services. The recent ChatGPT release used the Blackwell platform for design and training, delivering top training speed and minimal inference expense.

Revenue rose 95% from the prior year in fiscal 2027 first quarter (ended April 26), marking the third period of faster growth and 14th straight quarter of increases. Nvidia added $13.5 billion in sequential revenue. Management anticipates ongoing expansion.

Already leading

Share price stagnation stems partly from growth already reflected in valuations. Still, Nvidia shares do not appear overly costly.

Data by YCharts.

Expectations may simply be rising too fast. Nvidia surpassed estimates on revenue and earnings as usual. Yet performance bars continue to climb.

Company gross margin deserves attention. It climbed from 60% last year to 75% this year for the first quarter, though the prior period included a charge tied to unsent China-specific chips under regulations. Otherwise the margin aligned with or fell slightly below the earlier level, suggesting limited gains at that metric.

Data by YCharts.

Guidance calls for the margin to hold at 75% in the second quarter. At Nvidia's scale, surpassing all global tech peers, such details carry greater weight.

Thus even with continued strong growth reports, shareholders should prepare for intense scrutiny and demands for flawless execution.

Is Nvidia stock a buy now?

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Jennifer Saibil holds no positions in mentioned stocks. The Motley Fool maintains holdings in and endorses Nvidia. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.