3 Reasons to Buy Nvidia Stock in June

Nvidia posted blowout fiscal Q1 results, with revenue up 85% to $81.6B and adjusted earnings up 139% to $45.5B, yet the stock fell 5% in the four trading days after the report. Analysts raised next-year EPS estimates to $12.66 from $11.63 a week earlier, making the stock look cheaper at 17x next year's earnings and 24x current-year earnings. The article argues that China restrictions and supply constraints are limiting upside, while an $80B buyback and 25-fold dividend increase signal management views the shares as undervalued.

Analysis

The market is signaling a classic post-earnings compression setup rather than a deterioration in fundamentals: expectations are being lifted faster than the shares can absorb, which is often the precursor to a second-leg move once buybacks and incremental estimate revisions start filtering through. The key second-order effect is that NVDA is becoming less of a pure growth multiple story and more of a capital-return + scarcity story, which can broaden the holder base to dividend and repurchase-sensitive accounts and dampen downside on weak tape.

The real upside torque is not just in core AI demand, but in reopening optionality around China and in the ecosystem. If export restrictions ease even partially, the beneficiary list is broader than NVDA: foundry, advanced packaging, high-bandwidth memory, and networking vendors should see a renewed order wave with lead times and pricing power re-accelerating. Conversely, the current leadership of memory/infrastructure names has already priced in a lot of that rebound, so NVDA may be the better risk-adjusted way to express the cycle because it still has the highest margin of incremental upside from any normalization.

The contrarian miss is that the stock may be cheap on next year’s earnings only if those revisions continue; if delivery cadence slips, the multiple can de-rate quickly because the valuation support is still forward-estimate dependent. The main tactical risk is a 1-2 quarter pause in data-center digestion or another export-control tightening, which would hit sentiment before fundamentals. Near term, the setup is favorable over weeks to months, but the trade should be sized for policy headline volatility rather than operating risk.

Technically, the post-earnings fade looks like weak hands distributing into strong fundamentals; that often resolves higher once the next catalyst arrives. The most actionable read-through is that management’s buyback authorization implies they view the equity as under-earning its intrinsic value, so any further pullback is likely to be bought by multiple constituencies, not just growth investors.

Key Decisions for Investors

• Add to NVDA on further 2-4% weakness over the next 1-2 weeks; target a 3-6 month upside re-rating as estimates continue to rise, with downside anchored by capital returns and balance-sheet support.
• Buy NVDA call spreads 1-2 months out to express a post-pullback rebound without paying full premium; structure for a move back to prior highs if China headlines or next estimate revisions act as catalysts.
• Pair long NVDA / short a basket of higher-multiple AI infrastructure names that have already re-rated harder, to isolate the company-specific earnings-to-valuation disconnect.
• If seeking a policy hedge, keep a small short-dated put spread against NVDA into the next export-control headline window; that caps tail risk from a sudden China restriction escalation while preserving upside exposure.