Nvidia (NVDA) deserves to be a top long-term portfolio holding in part because of its lucrative profit margins, one veteran investor says.
“I don’t have any company with operating margins as fat as Nvidia — they’re ridiculous,” Navellier & Associates founder and chairman Louis Navellier said.
Given its wide lead in semiconductor innovation, Nvidia has been able to command premium prices for years. The trend has only accelerated in the current cycle led by powerful AI chips such as Hopper and, soon, Blackwell.
Nvidia’s operating profit margins have gone from 39.9% for the fiscal year ended Jan. 31, 2021, to 58.1% for the fiscal year ended Jan. 28, 2024. When Nvidia reports earnings on Feb. 26, analysts estimate it could report an operating margin of 67.5% for last year. For 2025, the Street thinks Nvidia’s operating margins will be around a similar level. “Margin expansion creates a lot of earnings surprises,” Navellier says on why it’s hard to sell out of Nvidia. “You want positive revisions. The analysts are notorious [for] underestimating. And so while the stock is being institutionalized, just want to ride it as long as you can.”
The Street is sticking with Nvidia going into its market-moving earnings report on Wednesday after the close of trading.
Despite China-based DeepSeek rocking the super-bullish AI thesis earlier this year, Wall Street still sees Nvidia profiting from the global buildout of AI infrastructure. Aggressive 2025 capital expenditure assumptions by hyperscalers such as Amazon (AMZN) and Meta (META) shared during this earnings season underscore the point.
