Nvidia (NVDA) Breaks Away From The Chip Pack To A New Level
Nvidia (NVDA) Investment Thesis Q42026 :
Nvidia's stock is trading almost independently of the broader semiconductor sector, according to Bespoke Investment Group data cited by The Kobeissi Letter and reported by many media outlets.
Over the past three months, Nvidia's correlation with the PHLX Semiconductor Index (SOX) was at just 0.03, which is perhaps the lowest among the index's components. The reading is also unusual, as Nvidia is also the group's largest company by market capitalization.
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Nvidia (NVDA) has so far delivered another profitable yet turbulent year for its investors.
According to my technical analysis, NVDA shares are up 17% year to date, yet have advanced just about 1.5% over the past three months as the rallies have come up against profit-taking.
That choppiness was on full display during the week of Aug. 24, when Nvidia jumped 8.7% following its fiscal 2027 Q2 results, only to surrender 4.6% in the next session. Beneath those swings, though, the stock flashed a surprising signal that changes how investors assess its risks.
That said, Q2 reinforced Nvidia's tremendous dominance.
Revenue was up 106% to a whopping $96.2 billion, while adjusted earnings beat expectations again, with management forecasting $108 billion in current-quarter sales. Moreover, Nvidia took things up a notch, projecting 70% revenue growth for fiscal 2028, suggesting the AI infrastructure boom still has plenty of room to run.
Those numbers seem almost impossible to believe, considering that Nvidia generated just $6.7 billion in sales in fiscal 2023's Q2, during the pre-ChatGPT era.
Nevertheless, investors are uneasy over data-center spending, margin pressures from memory pricing, and the remarkably costly ecosystem financing. Those major concerns have effectively made each quarterly report a test of whether the AI giant can continue blowing past expectations.
According to all the data, Nvidia has delivered eight EPS beats and seven revenue beats over the past two years — an impressive feat, to say the least.
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