Nvidia’s latest product launch is reigniting debate around one of the market’s most valuable stocks. On Dec. 15, Nvidia unveiled its Nemotron 3 family of open models, designed to support transparent, efficient, and specialized agentic AI across multiple industries. The question for investors is whether Nvidia Nemotron 3 AI models meaningfully strengthen the company’s moat—or if valuation risks still dominate the story for NVDA stock.
What Nemotron 3 Means for Nvidia’s Strategy
The Nemotron 3 release builds directly on Nvidia’s push beyond hardware into full-stack AI platforms. Nvidia Nemotron 3 Nano model delivers roughly four times the throughput of its predecessor, Nemotron 2 Nano, while lowering compute costs. That improvement makes it practical for real-world workloads such as software debugging, content summarization, and AI assistants.
This matters because Nvidia Nemotron 3 AI models are not just research tools. Early adopters already include ServiceNow (NYSE:NOW), Palantir (NYSE:PLTR), Perplexity, and Oracle Cloud Infrastructure, signaling demand from enterprise customers deploying agentic AI at scale. As Nvidia embeds its models deeper into customer workflows, switching costs rise and long-term revenue visibility improves.
NVDA Stock Valuation and Recent Pullback
Despite its technological momentum, Nvidia stock is not cheap. Nvidia (NASDAQ:NVDA) currently carries a market capitalization of roughly $4.15 trillion, even after shares have pulled back more than 17% from recent highs. That decline reflects investor concerns about how long hyperscalers can sustain aggressive AI spending.
Competition is also intensifying. Advanced Micro Devices (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO) are expanding their AI offerings, while Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) continue developing custom in-house chips. Even so, the longer-term trend remains intact. Over the past 52 weeks, NVDA shares are still up about 40%, suggesting the recent drop looks more like a reset than a structural breakdown.
Financial Performance Still Sets Nvidia Apart
Financially, Nvidia continues to justify its premium. The stock trades at a forward price-to-earnings ratio of about 40x, well above the sector average of roughly 24x. That premium reflects expectations for superior growth rather than income, as Nvidia’s dividend yield remains minimal at about 0.02%.
What truly supports the bull case is execution. In its latest quarter, Nvidia reported record revenue of $57 billion, up 62% year over year, driven primarily by data center revenue of $51.2 billion. Gross margins remained exceptionally strong at over 73%, while earnings per share reached $1.30 on both a GAAP and non-GAAP basis. During the first nine months of fiscal 2026, Nvidia returned $37 billion to shareholders through buybacks and dividends, reinforcing confidence in its cash-generating power.
Growth Partnerships Fuel the AI Ecosystem
Nvidia Nemotron 3 AI models also tie into broader partnerships. Nvidia’s expanded collaboration with Synopsys (NASDAQ:SNPS) integrates AI directly into engineering and design workflows, helping customers reduce development time and costs. Nvidia underscored its commitment by investing $2 billion in Synopsys stock.
Internationally, Nvidia’s partnership with HUMAIN—a PIF-backed AI firm—highlights growing demand for sovereign AI infrastructure. HUMAIN plans to deploy up to 600,000 Nvidia GB300 platforms over the next three years while using Nemotron models to train its own AI systems. Meanwhile, Nvidia’s work with Upwind strengthens AI security by protecting GPU-based infrastructure such as DGX and Blackwell platforms.
Analyst Outlook: Optimism With Caveats
Looking ahead, Nvidia expects fourth-quarter fiscal 2026 revenue of about $65 billion. Analysts forecast EPS growth approaching 70% to 96% year over year in upcoming quarters. Morgan Stanley recently raised its price target to $250, while Loop Capital issued a Street-high $350 target. Skeptics remain, however, with Seaport Research maintaining a “Sell” rating due to perceived ecosystem risks.
Final Take on NVDA Stock
Overall, Nvidia appears best categorized as a Hold with a buy-on-the-dip bias. Nvidia Nemotron 3 AI models reinforce the company’s leadership in agentic AI, while financial performance remains elite. Valuation concerns and macro uncertainty may keep volatility elevated, but unless demand falters, Nvidia’s long-term growth story remains firmly intact.
Featured Image – Megapixl
