Nvidia’s (NVDA) Cash Flows Stay Strong — Bullish on Long-Term Growth

Nvidia (NVDA) has been on a boom cycle and is showing cash flow resilience that supports long-term growth. Traditionally, semiconductor companies have been ranked as short-duration businesses because inventories, capacity utilization, and equipment orders can reverse quickly. However, transformative platforms can diffuse over decades, with waves of growth rather than one clean surge. This appears to be Nvidia’s case: even after the first wave peaks, additional growth is likely, making me bullish on the stock.

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Nvidia Is an Ultra-Growth Company with Durable Demand

In Fiscal 2026, Nvidia’s revenue reached $215.9 billion, of which Data Center revenue was about 90% of the total. Data Center networking revenue grew roughly 142% year-over-year. That’s not really the profile of a one-product semiconductor trade.

Still, the company’s own accounting doesn’t yet reflect long-duration software-like mechanics. As of January 25, 2026, remaining performance obligations from contracts longer than one year were only $2.3 billion, and about 42% of that is expected to be recognized in the next 12 months. However, this reported backlog likely understates the franchise’s true economic duration, because deferred revenue additions totaled $11.1 billion in Fiscal 2026, including $9 billion in customer advances.

Ultimately, the business is in high demand, but the tangible future earnings vision remains hypothetical, which is why the equity remains somewhat underpriced and why I’m staying bullish. From first principles, I’m also bullish on the company because artificial intelligence (AI) is clearly improving productivity. Furthermore, it’s already proving the ability to raise margin bands. These factors mean that spending is likely to be durable in the long term, because costs that generate profits are usually chosen by businesses as sustained parts of financial structures.

Hyperscale Capex and the Multiyear Infrastructure Buildout

Meta (META) guided 2026 capex at $115 billion–$135 billion and announced a multi-year strategic partnership with Nvidia to build AI-optimized data centers for training and inference. Amazon (AMZN) said it expects about $200 billion of 2026 capex and explicitly framed the spending around strong demand and long-term return on invested capital.

Similarly, OpenAI and Nvidia have announced a strategic partnership to deploy at least 10 gigawatts of Nvidia systems; the first phase is targeted for the second half of 2026. Clearly, these are all signs of a multiyear infrastructure buildout.

The main risk is that hyperscalers decide on a digestion phase, perhaps during a period like a recession or a moment of inhibition, such as energy constraints. Also, Nvidia is heavily concentrated in its customer base for now. The company’s top two direct customers, primarily system integrators, accounted for 22% and 14% of Fiscal 2026 revenue, respectively. The reliance on a handful of hyperscalers is even deeper than it appears, with Nvidia noting that at least two indirect customers each contributed 10% or more of the total revenue.

Valuation Framework and Risk-Adjusted Positioning

Technically, the stock is currently testing a major long-term floor. It remains well supported near its 200-week moving average, with the weekly relative strength index (RSI) at the median of about 50. This means NVDA is likely fairly valued at this juncture, and the entry point is therefore reasonably strong. I am personally forecasting an upside of about 35% over the next year, based on January 2028 normalized earnings per share (EPS) of $12 and a conservative January 2027 forward P/E of 19.

Of course, I can see a scenario where sentiment weakens temporarily, which is why I am currently sizing my AI investments at 50% of what I would have if S&P 500 valuations were not currently about +2 standard deviations above historical trends. Maintaining this ‘dry powder’ allows me to capitalize on any valuation mean-reversion while protecting the portfolio’s total return during this period of extreme concentration.

Is NVDA a Good Stock to Buy Now?

On Wall Street, Nvidia has a consensus upside of about 59%, based on 41 Buys, one Hold, and zero Sells. The average NVDA price target is $274.03, and the current price at the time of writing is $172.70. This shows an even more optimistic outlook than my own forecast, which provides somewhat of a margin of safety in sentiment.

A couple of strong analysts further reinforce the view that this investment still has room to run — for example, James Schneider from Goldman Sachs (GS) estimates 45% upside, and Joseph Moore from Morgan Stanley (MS) indicates 50.5% upside. A solid portfolio strategy is obviously paramount, but I think Nvidia certainly deserves a place within a robust overall framework. After all, it’s currently at the center of the AI infrastructure age.

Nvidia Stock Is Still Going Strong

Overall, I am bullish on Nvidia because the business shows that it’s breaking historical cycles in favor of an enduring bull phase centered on intelligent compute proliferating across the globe and through industries. The valuation is currently lower than all-time highs, and technicals signal a good entry point. Moreover, even if hyperscaler demand shows a digestion phase, sizing at 50% of the ideal position size gives one room to size up during any drawdown, protecting long-term returns.

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