Nvidia Faces Challenges in 2025: Export Controls, Competition, and Market Uncertainty

Nvidia shares slump 20% in 2025; here's what's troubling Jensen Huang and why the stock is falling

Nvidia's stock has declined in 2025 after a stellar 2024, facing headwinds from US export controls that crippled its China sales. Huawei's emergence with competitive AI chips further challenges Nvidia's dominance, attracting major Chinese tech firms. Increased tariffs between the US and China have exacerbated the situation, impacting Nvidia's financial performance.Nvidia has been one of the brightest stars in the artificial intelligence boom because of the wave of demand sparked by the success of OpenAI's ChatGPT in 2022. But in 2025, the tide has started to turn. The stock of the chipmaker has declined about 20% this year, following a sharp 171% rise in 2024, as per a report. Behind the sudden change of fortune is a lengthening list of problems, most significantly in China, which was once one of Nvidia's most profitable markets, as per The Street. CEO Jensen Huang is now confronted with a combination of geopolitical, competitive, and financial headwinds that are beginning to bear down on the company. Nvidia, the market-leading provider of graphics processing units (GPUs) to drive AI research and applications, has been among the largest beneficiaries of worldwide AI spending, according to the report. As companies revamped infrastructure to accommodate AI tools, Nvidia's revenue skyrocketed, as per The Street. But the firm's hold on the Chinese market is weakening. A sequence of progressively tighter US export controls, intended to restrict China's access to cutting-edge AI technology, has strangled Nvidia's capacity to sell Nvidia's top AI chips in the country, reported The Street. Huang recently acknowledged that sales are "about half of what it was before the export control," quoted The Street. But the condition worsened last month when the Trump administration tightened export controls, shutting down the exports of Nvidia's H20 chip, which is specially designed for China, as per the report. The action caught investors off guard when Nvidia reported a $5.5 billion write-down in the first quarter due to the remaining H20 inventory, according to The Street. This came at a time when US president Donald Trump's tariffs war with China has increased and the US has imposed 145% tariffs on Chinese products, in response China increased its own tariffs to 125%, as per the report Compounding Nvidia's woes is a head-on challenge from an emerging rival. Nvidia's Chinese competitor, Huawei, has announced a new AI chip to challenge Nvidia's dominance, reported The Street. Its soon-to-be-released Ascend 920 chip, which is built on SMIC's 6-nanometer technology, is placed as an alternative to Nvidia's H20, as per the report. While its current 910C and 910D chips already keep up with Nvidia's popular H100 GPU, reported The Street. Testing on Huawei's 910D will begin in May, and production of the 910C is expected to ramp up later this year, as per the Wall Street Journal. Chinese tech leaders like ByteDance, Alibaba, and Tencent are lining up to tap into these domestically produced alternatives, potentially filling the void left by Nvidia, according to the report. Why is Nvidia's stock down in 2025? A combination of export restrictions, loss of China sales, and rising competition from Huawei. Why can't Nvidia sell its H20 chips? New US export restrictions shut down those exports to China.

Nvidia Stock Is Rallying Thursday: What's Driving The Action? - NVIDIA (NASDAQ:NVDA)

Feel unsure about the market's next move? Copy trade alerts from Matt Maley -- a Wall Street veteran who consistently finds profits in volatile markets. Claim your 7-day free trial now. NVIDIA Corp NVDA shares are trading higher Thursday following strong quarterly reports from Microsoft Corp MSFT and Meta Platforms Inc META. The stock also took another leg higher following reports suggesting a potential easing of chip restrictions. What To Know: The U.S. is considering pulling back on Nvidia chip sales restrictions to the United Arab Emirates, Bloomberg reported Thursday. People familiar with the matter said President Donald Trump could be preparing to announce a bilateral chip deal in a planned trip to the Gulf region. Although on official decision hasn't been made, talks of a potential easing have reportedly been picking up momentum at the White House and the Commerce Department. Trump is scheduled to make a trip to the UAE on May 15 as part of a broader visit to the Middle East slated to begin on May 13. The report indicates that companies are currently slated to start complying with the AI diffusion rule, which caps AI chip exports on about 100 countries, beginning that same day. Nvidia shares popped on the report, nearly touching $115 per share in trading Thursday before pulling back. The stock was still up approximately 4% at the time of writing, buoyed by AI optimism following strong reports from Microsoft and Meta. Microsoft shares were up about 8.5% at last check after the company beat analyst estimates for the third quarter, driven by strong Azure and cloud services growth, which increased 33% year-over-year in the quarter. Microsoft CEO Satya Nadella said AI and Cloud are "essential inputs" for every business in the company's earnings release. Check This Out: Microsoft's Blockbuster Quarter Cements Goldman's Bullish AI, Cloud Thesis Meta also reported strong quarterly results after the bell on Wednesday and raised its full-year capital expenditures forecast, which helped boost several AI-related names, reinforcing confidence in AI spending growth. "This updated outlook reflects additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware," the company said. Nvidia is set to report first-quarter financial results after the market close on May 28. Analysts are currently forecasting earnings of 88 cents per share and revenue of $43.07 billion, according to estimates from Benzinga Pro. The U.S. government informed Nvidia in April that it will need a license to export certain chips to China. The company said last month that it expected its first-quarter results to include up to $5.5 billion of charges associated with products held in inventory as a result of the restrictions. NVDA Price Action: Nvidia shares were up 4.04% at $113.32 at the time of publication Thursday, according to Benzinga Pro. Read Next: Nvidia CEO Jensen Huang Sounds Alarm As 50% Of AI Researchers Are Chinese, Urges America To Reskill Amid 'Infinite Game' Photo: epha1st0s/Shutterstock. NVDANVIDIA Corp$113.414.12%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum59.91Growth94.78Quality97.57Value7.39Price TrendShortMediumLongOverviewMETAMeta Platforms Inc$574.174.58%MSFTMicrosoft Corp$429.618.69%Market News and Data brought to you by Benzinga APIs

Better Artificial Intelligence (AI) Stock: Nvidia vs. Super Micro Computer Inc. | The Motley Fool

Investors are flocking to the artificial intelligence (AI) space to find stocks capable of producing huge gains for their portfolio. Already, many companies have seen their valuations soar. But the biggest days of growth are still ahead. In 2023, the AI market was valued at just $189 billion. By 2032, this market is expected to surpass $4 trillion in value. Both Nvidia (NVDA 2.33%) and Super Micro Computer Inc. (SMCI 2.87%) are exposed to rising demand for AI. But only one stock should top your buy list for its long-term growth potential. Make no mistake: Both of these companies are exposed to the rising tide of AI demand. But each has a very different strategy for how they will benefit. Let's start with Super Micro Computer. In a nutshell, the company sells computer servers specially designed for running AI programs faster and more efficiently. These custom systems are basically one-stop shops, with the required graphics processing units (GPUs) and cooling systems ready to go. Nvidia, meanwhile, is a supplier to Super Micro Computer. In fact, most of the GPUs Super Micro Computer includes in its systems are Nvidia chips. Think of Super Micro Computer as a direct supplier to AI and data center companies, while Nvidia is a direct supplier to those looking to set up infrastructure to run those businesses. Thanks to the rapid growth in AI infrastructure spending, both companies are growing quickly, with more than 50% sales growth projected for both businesses this year. But if you want to figure out which business is more valuable, just look at each stock's gross margins and price-to-earnings (P/E) ratios. Nvidia's gross margins are more than six times higher than Super Micro Computer, and its valuation is more than double on a P/E basis. So, both companies are bonafide AI businesses that are growing quickly. But only one company should top your buy list: Nvidia. As we'll see, its high margins and valuation are well deserved. NVDA Revenue Growth Estimate for Current Fiscal Year data by YCharts. When it comes to investing in AI stocks, Nvidia should be at the top of your list. What Super Micro Computer does -- essentially aggregating a bunch of third-party components -- is far easier to commoditize than what Nvidia is doing. In a nutshell, it's far easier to replicate Super Micro Computer's business than Nvidia's. Nvidia's AI GPUs are the result of decades of investment, and its CUDA developer suite has proven an immense challenge to compete with, even for well-financed competitors like Intel and Advanced Micro Devices. Right now, Nvidia controls 70% to 95% of the AI GPU market. Super Micro Computer, meanwhile, controls just 8% of the AI server market. So not only is Nvidia's competitive position more durable, but it's also simply more dominant. All of these result in 75% gross margins, indicating far more pricing power versus Super Micro Computers. Over time, I expect Super Micro Computer's revenues to expand heavily alongside rising investment for AI infrastructure in general. But due to the commoditized nature of its business, I don't expect gross margins to expand much. Nvidia, meanwhile, can expect to maintain its industry-leading margins for years to come. And shares aren't as expensive as they appear. Yes, Nvidia stock trades at 37 times trailing earnings. But compared to forward earnings -- that is, based on what analysts expect it to earn over the next 12 months -- shares trade at just 25 times forward earnings. That's a fair price for a dominant, profitable business exposed to the biggest growth opportunity in decades.

Should Investors Worry About Nvidia's Future in China? | The Motley Fool

Just a few years ago, Nvidia (NVDA 0.12%) generated more of its revenue in China than it did in the United States. But as the artificial intelligence (AI) boom took off, the U.S. started to become a bigger and bigger source of growth for the chip designer. U.S. tech giants from Amazon to Meta Platforms ramped up their AI platforms and turned to Nvidia for its top graphics processing units (GPUs) and other products and services. As a result, Nvidia's total revenue soared, climbing in the double and triple digits quarter after quarter to reach record levels. And China was becoming a smaller and smaller part of that picture. A geographic breakdown shows Nvidia's China revenue shrank to just 16% of total sales in the fiscal 2024 year from 26% just two years earlier. And U.S. revenue soared to 44% of total sales from 16% in that time period. But this trend wasn't uniquely due to an increase in U.S. spending on AI infrastructure. This also was a result of the U.S. government's decision back in 2022 to limit exports of powerful AI tools to China. And pressure on Nvidia's prospects in China has intensified in recent times. This month, the U.S. informed Nvidia that it could no longer export the chip it specially designed for China to that country. To make matters worse, big Chinese rival Huawei may be preparing a new chip to challenge Nvidia there. Should investors worry about Nvidia's future in China? Let's find out. First, it's important to remember that though government limitations on exports clearly have affected Nvidia's growth in China over the past few years, business in the U.S. and even in other countries has taken off. So Nvidia has generated significant growth -- even without a strong boost from the Chinese market. As mentioned, this is as the AI boom picked up momentum and major U.S. technology companies lined up to order Nvidia's top-performing GPUs, or AI chips used for tasks like the training and inferencing of large language models. Though Nvidia doesn't disclose who its biggest customers are, analyst reports and comments on AI investment from tech companies have helped many investors reach the following conclusion: Microsoft, Amazon, Meta, and a few other big tech players likely are among Nvidia's biggest customers. All of this shows that spending out of the U.S. has been a significant driver of Nvidia's recent growth. Now, let's consider the challenges Nvidia faces in China. As mentioned, the U.S. recently told Nvidia that it would need a special license to sell chips -- even its specially designed one that met export guidelines -- to China. The U.S. to date hasn't offered any company such licenses. Meanwhile, rival Huawei might be using this moment to take market share in its home country. The Chinese chip company is set to test a new AI chip -- a model that could rival one of Nvidia's most powerful chips, the H100 -- next month, according to a Wall Street Journal report. If this is successful, it may be very difficult for Nvidia to return to the Chinese market -- the U.S. won't allow the company to export high-performance chips there, and local customers may not want a lower-power one if they can get top performance from Huawei. Meanwhile, Nvidia may not be done with China. The DigiTimes reported that Nvidia may be considering the development of a separate business in China, according to Wccftech. Whether this is true or not, it's clear Nvidia's resourceful chief Jensen Huang could be thinking of various options that would allow Nvidia to maintain at least some business in the country. That said, investors probably shouldn't expect China to represent a big growth market for Nvidia any time soon. So, should investors worry about this situation? Of course, this virtual roadblock in front of the Chinese border isn't good news for Nvidia. But it doesn't represent the end of Nvidia's supercharged growth story either. As we've seen in recent years, the company has benefited from growth in the U.S., and its move to produce more and more chips at home could support this. Nvidia said recently it would produce as much as $500 billion in AI infrastructure in the U.S. over the coming four years. It's important to remember that the AI infrastructure buildout is far from over, and technology companies -- such as Alphabet just last week -- have spoken about their aggressive spending plans and have mentioned Nvidia as a key partner. All of this means that, yes, Nvidia could be set to face a tough moment in China. And in the worst scenario, Huawei may even jump ahead of Nvidia in China if Nvidia can't find a way to sell its chips there. But, even in that situation, the company's business elsewhere remains strong enough to drive enormous growth over time -- and make Nvidia a fantastic bet for investors on the long-term AI story.

Nvidia Stock Is Pulling Back Today. Here's Why Investors Are Nervous. | The Motley Fool

It's actually more than one thing putting pressure on Nvidia shares. First, investors got a business update from server manufacturer Super Micro Computer last night, where the artificial intelligence (AI) player slashed its guidance. Then one Wall Street analyst piled on the fear with a "sell" recommendation on Nvidia. That was based on some of the same concerns impacting Super Micro's business. Super Micro preannounced its fiscal 2025 third-quarter results for the period ended March 31. It cut its quarterly revenue estimate by nearly $1 billion to about $4.55 billion. The maker of AI servers and cooling systems said some customers delayed investment decisions and expects those sales to move to the current quarter. Investors are wondering if some of those delays might speak more to an environment where big AI cloud infrastructure companies are cutting back on data center investments. If so, that could hit Nvidia sales in a big way. Nvidia shares have been under pressure all year, partly from uncertainty and concerns for slowing sales growth. It will be almost another month before investors hear directly from Nvidia, since it reports quarterly results on May 28. One Wall Street analyst doesn't think investors should wait for that. Seaport Research analyst Jay Goldberg put a $100 price target on Nvidia shares today, representing a 5% drop from recent levels. The analyst feels that gains from AI spending are already priced into Nvidia shares, and that growing questions surrounding future spending on AI infrastructure also will pressure the stock. He believes investors should sell shares now. I believe long-term investors should hold Nvidia stock. Super Micro's problems could be internal or due to rising competition in its niche market. Even if data center spending is slowing, Nvidia can easily withstand a slowdown in the short term. Therefore, the stock remains a buy-and-hold name, in my view.

2 AI Stocks to Buy and Hold for 10 Years | The Motley Fool

The recent sell-off in tech stocks is a great opportunity to buy shares of leading artificial intelligence (AI) companies at a discount. The AI market is projected to grow 26% on an annualized basis to reach $1 trillion by 2030, according to Statista. Here are two stocks to gain exposure to this burgeoning market. C3.ai (AI -2.27%) builds AI software that helps businesses streamline operations, making faster decisions, and optimize supply chains. The company's revenue growth accelerated last year. Its strategic partnerships with leading cloud services and long-term growth potential could make it a very rewarding investment. C3.ai distinguishes itself from competitors by focusing on serving large organizations that have complex problems. Many of its customers are industry leaders across oil and gas, utilities, defense, industrial products, and financial services. The downside to this strategy is that it serves a relatively small number of companies that comprise a high percentage of its annual revenue. Customer concentration risk has loomed over the stock over the past year, but C3.ai has great momentum in diversifying its business that could benefit the stock. C3.ai's revenue grew 26% year-over-year in the fiscal third quarter, while the consensus Wall Street estimate has revenue growing 25% for the full year, according to Yahoo! Finance. C3.ai has partnerships with the top major cloud providers, Microsoft and Amazon, that should open up sales potential to more customers worldwide. The sales pipeline through Microsoft Azure increased 244% year-over-year in the most recent quarter. Its strategic partnership with Amazon Web Services should lead to a similar expansion in its global sales potential. C3.ai stock's recent sell-off doesn't seem to reflect the progress the company is making to expand its market potential. The stock has been volatile, but continued revenue growth should ultimately lift the stock to new highs. Taiwan Semiconductor Manufacturing (TSM 1.45%) makes chips for several top tech companies like Nvidia and Apple. It has delivered market-beating returns for many years and should continue to do so over the next decade. The fluid situation with tariffs and the impact it could have on chip demand has sent the stock down. But investors only have to look at the company's capital spending plans to see where it's headed. TSMC has delivered high double-digit annual growth in revenue and earnings for over 30 years. Yet its revenue is still growing at a rapid clip, increasing 35% year-over-year in Q1. Management sees AI-related chip revenue growing over 40% annually over the next five years. The company plans to invest $165 billion in U.S.-based chip manufacturing. Last year it spent nearly $30 billion in capital expenditures, and plans to increase spending to between $38 billion to $42 billion in 2025. This indicates a strong outlook for AI chip demand. Leading companies are making long-term investments in AI infrastructure, and TSMC stock is a great way to profit from that opportunity. The stock is trading at a particularly compelling value point right now at just 17 times 2025 earnings estimates.

Down Nearly 20%, This AI Giant Is the Best Bargain "Magnificent Seven" Stock Right Now | The Motley Fool

Stocks known as the "Magnificent Seven" led market gains last year as investors bet on a potential artificial intelligence (AI) revolution. This group of top tech stocks has been investing heavily in AI, and each member is well positioned to benefit from the AI growth story. I'm talking about Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia (NVDA -0.24%), and Tesla. But in recent times, these once sought-after stocks have been much less popular with investors. As President Trump announced plans to tax imports, investors worried the tariffs, resulting in higher costs, could hurt both the U.S. consumer and U.S. companies. The S&P 500 index fell as much as 15% from the start of the year through its lowest point last month. Stocks across industries have suffered, but companies that rely heavily on production abroad took the biggest hit. And tech stocks are at the top of the list. Though Trump temporarily exempted electronics from tariffs, investors worry that an eventual duty -- regardless of the level -- will represent a headwind. And that's weighed on shares of one of last year's biggest AI winners. This company has seen its stock drop nearly 20% since the start of the year -- and valuation has followed. It's not the very cheapest of the Magnificent Seven, but it actually represents the best bargain right now. Let's find out why. You may be surprised when I tell you that this stock is the once high-flying Nvidia. It's hard to imagine the stock as a bargain after its 800% gain over the past two years. Why has Nvidia climbed? The company quickly emerged as the biggest potential winner of the AI race, and this is thanks to its leading portfolio of AI products and services. Nvidia makes the world's most powerful AI chips, known as graphics processing units (GPUs). These GPUs power crucial AI tasks -- and a high-performance GPU can make a huge difference in the outcome of a customer's AI projects. That's why some fellow Magnificent Seven companies -- as well as other tech giants -- are major Nvidia customers. Nvidia hasn't stopped at GPUs, though, and instead has built an entire ecosystem of products and services designed specifically for the AI customer. And the company has even created special platforms for various industries, such as healthcare or automotive. All of this has helped Nvidia's revenue to explode higher in recent years, reaching a record $130 billion in the latest full year. In recent times, though, concern about eventual tariffs on imports as well as government decisions that have barred Nvidia from exporting its chips to China have hurt demand for the stock. That's because these elements could impact the company's revenue to some degree. As a result, Nvidia stock slipped, leaving the stock trading for 24x forward earnings estimates. This isn't the cheapest of the Magnificent Seven, but it still remains an extremely reasonable price. Now, let's consider the element that makes the stock a bargain right now, and that could be seen in the chart below. This shows the trailing 12-month sustainable growth rate of Nvidia compared to other Magnificent Seven players. This metric represents the growth rate expected over time if the company's financial policies don't significantly change. As we can see, Nvidia's is the highest of the bunch. Though Apple is quite close, it's important to note that Apple's sustainable growth rate has been slightly on the decline while Nvidia's has been on the rise. This, combined with Nvidia's current valuation, make the stock look particularly cheap at the moment. Of course, you might say that we don't yet know the level of import tariffs on electronics and if tariffs are higher than expected this could weigh on growth. This is true. But this problem will impact the other Magnificent Seven companies too, hurting their growth prospects -- so they, too, could see lower earnings potential due to this headwind. That means Nvidia still could represent the best deal of the group. Beyond that, though, two other elements make me optimistic about Nvidia. One is that the company is very proactive, recently announcing a major investment in U.S. manufacturing -- this could lower its exposure to import tariffs. And second, Nvidia is known for its focus on innovation, with a pledge to update its GPUs on an annual basis. This should keep the company ahead of rivals, spurring significant growth in revenue as the AI boom continues. Nvidia's market leadership and efforts to limit negative tariff impact are positive -- and are reasons to believe the company can maintain a high rate of growth. And this along with the stock's current valuation makes Nvidia the best Magnificent Seven bargain buy right now.

Should You Forget Nvidia and Buy 2 Artificial Intelligence (AI) Stocks Right Now? | The Motley Fool

Nvidia has been a monster stock, rising 1,480% just in the past five years. But it experienced significant volatility this year. And as of this writing, shares trade down 17% since January 1. The business has become the poster child of the artificial intelligence (AI) boom, providing powerful graphics processing units (GPUs) that help run training and inference models. Revenue and earnings are soaring. However, Nvidia faces risks. Its business could slow dramatically in an economic downturn. Its largest customers are working on their own chips. Competition and supply chain challenges are also things to worry about. Investors might be looking at other options. Is it time to forget about Nvidia and instead buy these two AI stocks right now? When looking at AI stocks to add to your portfolio, it's a smart idea to consider companies that have long dominated the internet economy. I'm talking about Alphabet (GOOGL 1.48%) (GOOG 1.14%) and Meta Platforms (META 4.29%). Both businesses just reported Q1 financial results that came in better than expected, showcasing strong momentum. Alphabet owns some of the most popular internet platforms on the face of the planet. For example, streaming service YouTube has an estimated 2.5 billion monthly active users. Meta just revealed that its family of apps had 3.43 billion daily active users in the first quarter. It's hard to believe that this already gargantuan sum is 80 million more than just three months ago. Having massive user bases has given both Alphabet and Meta an edge when it comes to introducing AI products and services. According to Alphabet CEO Sundar Pichai, "Fifteen of our products with a half-billion users now use Gemini models." AI helps provide thorough responses in Search and traffic info in Maps, for instance. CEO and founder Mark Zuckerberg of Meta, on the other hand, said, "We're making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives." The social media juggernaut has plans to launch a separate AI app. These businesses are focused on adding AI functionality for their user bases. However, they haven't forgotten about the key customer group, which is advertisers, offering AI features that can be utilized in their campaigns. Investing in AI infrastructure isn't cheap by any means. This highlights just how critical it is to have access to capital for those enterprises that want to stay ahead of the curve. Here's where these two companies truly shine. Alphabet and Meta raked in $16.6 billion and $34.5 billion in net income, respectively, in the first quarter. Their profit margins are incredible. And if we look at these businesses' balance sheets together, they have a combined $125.8 billion in net cash (cash, cash equivalents, and marketable securities, minus long-term debt). In other words, there are essentially unlimited financial resources that these companies can tap. Alphabet plans to spend $75 billion on capital expenditures in 2025, while Meta just upped its target to a range between $64 billion and $72 billion. Critics will argue that the potential financial return of all this spending is uncertain. However, it's worth taking the risk to ensure they have a chance to become the AI leaders of tomorrow. The uncertain economic environment is having a negative impact on investor confidence. Risk-averse market participants might believe it's time to be a bit more cautious. But here's where the opportunity lies. Shares of these great businesses can be purchased at more attractive valuations. Alphabet trades at a forward P/E ratio of 17, below Meta's 22 multiple. It's not every day that their stock prices are off more than 20% from their peaks. Therefore, to gain AI exposure, investors might want to take a closer look at these tech giants.

Better Artificial Intelligence (AI) Stock: Nvidia vs. Intel | The Motley Fool

When it comes to investing in artificial intelligence (AI), buying shares of graphics processing unit (GPU) manufacturers like Nvidia (NVDA 2.33%) and Intel (INTC 3.00%) can be a wise decision. Nearly every AI application requires these specialized chips to function, and buying stock in a GPU maker gives your portfolio direct exposure to the entire AI industry. Right now, Nvidia shares give you more-direct exposure to AI demand, but Intel's discounted valuation and plans for growth make it an exciting story to watch. So which GPU manufacturer should you invest in today? You might be surprised by the answer. Most of Nvidia's gargantuan $3 trillion market cap can be attributed to its dominance in AI chips. Estimates say the company commands somewhere between 70% to 95% market share for GPUs designed for the AI market. This dominance was created over more than a decade of forward thinking. In 2006, for instance, Nvidia released its CUDA developer suite, which allowed developers to customize its chips to create unparalleled performance benefits. This customization also locked customers into Nvidia's hardware and has a flywheel effect for its software. The company was also one of the first to ramp up investment in machine-learning GPUs, giving it a crucial head start over the competition. Intel, meanwhile, has been left in the dust due to a variety of management errors. Today, its revenue is shrinking, with its valuation more than 90% below Nvidia's on a price-to-sales basis. Even management isn't confident that it can catch up to Nvidia anytime soon. Patrick Gelsinger, Intel's former CEO, recently said about Nvidia: "In that race, they are so far ahead. Given the other challenges that we have, we're just not going to be competing anytime soon." So when it comes to betting on AI, Nvidia is the clear winner right now. But might Intel shares be a worthwhile investment given their rock bottom valuation? Right now, Nvidia is selling tens of billions of dollars worth of AI accelerators each quarter. Advanced Micro Devices, a rival, is selling more than $1 billion worth each quarter. What about Intel? In 2024, it failed to reach its target of just $500 million in AI GPU sales for the entire year. Intel's competitiveness in AI right now simply cannot be undersold. But is the valuation low enough to warrant a small stake? I'd argue yes for one reason: gross margins. Due to heavy demand, many of Nvidia's chips are seeing waiting times of 12 months or more. Its products are priced at a steep premium to the competition, and rightfully so. Its gross margins are nearly 75%, while Intel's gross margins are closer to 30%. This is where Intel can compete. If demand for AI chips continues to outpace Nvidia's ability to meet that demand, it's possible that Intel can convince developers and data center operators to switch to its inferior product due to cheaper pricing and its availability. This adoption could help build out Intel's developer ecosystem, a major weakness in its current product. If you want to invest in AI, Nvidia should be a heavy position in your portfolio. But adding a small position in Intel could help diversify that bet for a very small price, allowing you to benefit wherever shares trend toward over time.

Nvidia Stock Investors Just Got the Best News of 2025 (So Far) From Meta Platforms, Amazon, and Microsoft | The Motley Fool

The death of the artificial intelligence (AI) revolution has been greatly exaggerated. The past few years have been a whirlwind for Nvidia (NVDA 2.33%) investors. The onset of the artificial intelligence (AI) revolution led to scorching demand for the graphics processing units (GPUs) that make AI possible. As the leading provider of these advanced chips, Nvidia has been one of the undisputed beneficiaries, with its stock growing more than eightfold in the two years heading into 2025. In recent months, however, the narrative has turn turned decidedly pessimistic. The combination of U.S. export restrictions and concerns about slowing of the AI spending boom has weighed on Nvidia stock, which is down roughly 25% from its peak (as of this writing). However, commentary from three of the company's biggest customers provided much-needed good news for Nvidia investors. The demand for data centers and servers with the computational horsepower needed for AI fueled a big run-up in capex spending by big tech. This spending helped fuel massive sales increases for Nvidia, as its data center segment generated six consecutive quarters of triple-digit year-over-year growth. However, numerous reports suggested that some of Nvidia's biggest customers were scaling back on data center spending, which sent the stock plunging. But the devil's in the details, and it turns out the sky is not falling after all. When Microsoft (MSFT 2.31%) released the financial report for its fiscal 2025 third quarter (ended March 31), the results were surprisingly robust and driven by strong demand for AI. The highlight was Azure Cloud, which grew 33% year over year and accelerated from 31% growth in Q2. Perhaps more impressive was the revelation that 16% points of that growth was related to AI services, up from 13% points in Q2. CEO Satya Nadella downplayed the reports of a slowdown in data center spending, noting this was merely the normal ebb and flow of regional data center planning. "We've always been making adjustments to build, lease, what pace we build, all through the last 10-15 years," Nadella said. He went on to say the company wants to ensure that the regional data center build-outs match the demand. They don't want to be "upside down," having too much capacity in one region and not enough in another. There were similar concerns of a slowdown in data center spending for Amazon (AMZN -0.20%). Kevin Miller, Amazon's vice president of global data centers, refuted the reports. "There's been really no significant change," he noted. "We continue to see very strong demand, and we're looking both in the next couple of years as well as long term and seeing the numbers only going up." When Meta Platforms (META 4.30%) reported its first-quarter results, the company made a surprise announcement that turned heads. The company revealed plans to increase its 2025 capital expenditures (capex) spending to $68 billion at the midpoint of its guidance, up from its previous forecast of about $62.5 billion. The company said, "This updated outlook reflects additional data center investments to support our artificial intelligence efforts, as well as an increase in the expected cost of infrastructure hardware." As the leading provider of GPUs used to power AI in data centers, Nvidia is poised to benefit from the ongoing data center build-out. This will support the ongoing and accelerating adoption of AI. Lest there be any doubt, the three aforementioned companies are among the biggest players in AI and are among Nvidia's biggest customers. While the chipmaker has kept the exact order close to the vest, analysts with Bloomberg and Barclays Research suggest that Nvidia's four biggest customers -- responsible for nearly 53% of its revenue -- are: Recent commentary from several of these tech stalwarts refutes the contention that spending on data centers and AI is slowing. It seems clear that the AI revolution is alive and well, but there are still challenges ahead for Nvidia. The tariff situation remains a wild card and is subject to change from day to day. If the tariffs imposed by the Trump administration linger, chip prices could climb, and Nvidia's results could suffer. Additionally, some investors are still wary of the future adoption of AI and how it will impact the company's future growth. This negativity has persisted, despite evidence to the contrary. However, for investors with a long-term outlook, Nvidia looks increasingly compelling. The stock is currently selling for 39 times trailing-12-month earnings, with the multiple near its lowest point in over three years. Furthermore, its forward price-to-earnings ratio of 26 is an attractive price to pay for a company powering the AI revolution.

Prediction: This "Magnificent Seven" Stock Will Be the Most Valuable Company in the World by the End of the Year | The Motley Fool

Among the world's most valuable companies, seven of them are artificial intelligence stocks. For the last two and a half years, the technology sector has witnessed an abnormal level of interest compared to other industries. By no stretch of the imagination, this dynamic is connected to unrelenting euphoria surrounding artificial intelligence (AI). What's interesting, however, is that the AI theme can largely be traced to a small concentration of megacap stocks. Known as the "Magnificent Seven," Apple, Microsoft, Nvidia (NVDA 2.33%), Alphabet, Amazon, Meta Platforms, and Tesla are some of the most widely held stocks in the S&P 500 (SNPINDEX: ^GSPC) right now. As of May 1, Nvidia is the third-largest company in the world as measured by market cap -- sitting behind just Apple and Microsoft. Let's explore some of the factors that have influenced Nvidia's valuation throughout 2025. More importantly, I'll detail what catalysts could fuel Nvidia to become the most valuable company in the world by year-end. It's been a tumultuous year for Nvidia. As of this writing, the stock has plummeted by 15% -- more than triple the declines seen in the S&P 500. To quantify just how much value Nvidia has lost, consider the company's current market cap is nearly $1 trillion lower than peak levels seen in January. The first large-scale sell-off in Nvidia stock happened earlier this year, after a Chinese start-up called DeepSeek emerged out of nowhere. DeepSeek claimed that it built an AI platform on par with many leading models built here in the U.S., but was able to do so by using older Nvidia architectures. For a brief period, investors started to question what demand would look like for Nvidia's next-generation chipsets. After several weeks of investigative reporting from Wall Street analysts and technology journalists, it began to emerge that there was likely more to DeepSeek's initial assertions. The current sell-off in Nvidia revolves around a nasty storm related to new tariff policies. More specifically, ongoing tension between the U.S. and China has some investors seriously worrying about Nvidia's potential in the Chinese market as it now battles a much tougher landscape featuring capable competition from Huawei. I see Nvidia as a more critical player to the overall development of AI-powered services compared to Apple and Microsoft. I think both Apple and Microsoft will face more scrutiny from investors in coming quarters. Demand for iPhones in the Chinese market and here domestically could take a toll thanks to mounting pressures surrounding the ongoing tariff situation. Meanwhile, Microsoft's primary catalyst of cloud computing services faces a tough competitive landscape from Google and Amazon. Now that May has arrived, investors are set to receive a number of updates as many of the world's leading technology companies report earnings for the first calendar quarter of 2025. As of closing bell on April 30, Microsoft, Meta Platforms, and Alphabet -- each of which works closely with Nvidia -- have reported earnings. During Alphabet's first-quarter call, management reaffirmed prior guidance to spend $75 billion in capital expenditures (capex) this year. In addition, Microsoft doubled down on its own capex plans for the second half of the year while Meta actually increased its prior guidance. These are important themes to understand. If Nvidia's largest customers were not seeing robust demand for their own AI services, then it's likely they would pull back their infrastructure budgets. However, despite a turbulent macroeconomic environment, big tech appears to be confident in the long-run potential of the AI revolution -- hence, they remain committed to spending tens of billions on data centers, servers, chips, networking equipment, and more. To me, these dynamics support the idea that Nvidia should remain a top vendor as tech giants continue building their AI infrastructure. Moreover, I think Nvidia is best positioned among the Magnificent Seven to benefit from AI capex tailwinds. For these reasons, I think Nvidia should witness strong demand for its GPUs and various other services throughout the second half of the year. I am optimistic that investor confidence will begin to sway in Nvidia's favor again -- propelling the company to a much higher valuation than where it is today and surpassing that of its Magnificent Seven peers.

Where Will Nvidia Stock Be in 4 Years? | The Motley Fool

Nvidia (NVDA 2.33%) has been the must-own stock for the artificial intelligence (AI) race. However, it sold off a fair bit over the past few months alongside the rest of the market. Currently, it sits around 25% to 30% down from its all-time high, trading at levels last seen during the late summer of 2024. It's not often that a sale price comes around on a big-time winner like this, but today's sale price only really matters if Nvidia is still heading in the right direction a few years from now. So, where will Nvidia be in four years? The answer may surprise you. Nvidia's graphics processing units (GPUs) drive the company. Originally designed for processing gaming graphics, GPUs soon found many alternative uses. Due to their unique ability to process multiple calculations in parallel, they are useful for any task that requires intense computing power, such as training and running an AI model. Nvidia isn't the only company making GPUs, but it dominates the market. Most estimates peg Nvidia's data center GPU market share above 90%, which is very impressive. However, with that kind of market share dominance, it invites other players to the industry, as Nvidia is making a ton of money from its GPUs. Nvidia's profit margins have skyrocketed since the start of the AI race, and some of its clients are getting fed up with the price they must pay for Nvidia GPUs. So, they're starting to look for alternatives. One area that many of the AI hyperscalers are looking toward is custom AI accelerators, such as those designed by Broadcom (AVGO 3.17%). These units are tailored to process one type of workload and can outperform Nvidia GPUs in certain applications, such as training and running AI models. However, they are tailored for a specific workload, making them inflexible to run others. This likely isn't a big deal, as many of the AI hyperscalers already know how they want their AI workloads to run. As a result, Nvidia could see some competition coming its way, but it likely won't be enough to dethrone Nvidia as an investment. The biggest factor for Nvidia investors is understanding where data center capital expenditures are going. If this spending falls off a cliff, Nvidia's revenue will follow. However, using outside data, Nvidia projects that data center capital expenditures will rise from around $400 billion in 2024 to $1 trillion by 2028. Over the past 12 months, Nvidia has generated $115 billion from its data center division. If that $400 billion figure is true for 2024, that means it captured just shy of 30% of total data center spending. Should data center capital expenditures expand to the $1 trillion mark and Nvidia keep all of its market share, it would generate around $288 billion. That's monster growth, but Nvidia may not be able to capture all of it due to rising competition from custom AI accelerators. Broadcom estimates that the addressable market will be between $60 billion and $90 billion from three major clients alone by 2027. That's about a third of Nvidia's projected 2028 revenue (if it captures all of it), so it's safe to say that Broadcom is targeting Nvidia's market share. So, is Nvidia doomed over the next few years? I'd say no. The future will likely be a combination of GPUs and custom AI accelerators, meaning stocks like Nvidia and Broadcom will be successful investments. Will Nvidia have the rocket-ship growth it once did? Likely not. But it will likely still put up strong double-digit growth, making it a great candidate for a stock that can beat the market moving forward, especially if you can scoop up shares on sale right now. However, if the data center market doesn't reach that projected figure, Nvidia's stock may struggle to rise, as its overall revenue may be capped and under pressure as competition rises.

3 Tech Stocks You Can Buy and Hold for the Next Decade | The Motley Fool

The recent volatility in the stock market has seen many technology companies fall into value territory. For investors with a long view, this can be a great time to start accumulating shares in market-leading companies that are trading at attractive valuations. Let's look at three leading tech companies that fit this bill. Despite a bounce from its lows, Nvidia (NVDA -0.24%) is still very attractively valued, trading at a forward price-to-earnings ratio (P/E) of under 25 times this year's analyst estimates and a 0.5 price/earnings-to-growth (PEG) ratio. Stocks with PEG ratios below 1 are typically viewed as undervalued, so by this metric, Nvidia's shares remain on the clearance rack. Admittedly, there have been some investor concerns about the stock recently. The impact of a chip export ban to China and tariffs on the company has been one concern, while the bigger one has been worries that data center spending is about to slow. However, commentary from the sector continues to point to strong data center growth ahead. At a recent conference, Amazon said that it only sees numbers going up, while on their earnings calls, both data center supplier Vertiv and cloud computing company Alphabet echoed the strong demand and capacity constraints in the market they were seeing. That's great news for a company that has a more than 80% share in the graphic processing unit (GPU) market, which is the main chip used to power AI workloads. Nvidia has created a wide moat with its CUDA software platform, which allows its chips to be easily programmed. It also has a collection of AI-specific libraries and tools that help improve its chips' performance running AI workloads. As long as data center spending continues to rise, Nvidia's stock should be a long-term winner. Alphabet (GOOGL -0.75%) (GOOG -0.62%) is arguably one of the cheapest mega-cap tech stocks out there, given the collection of market-leading and emerging businesses under its umbrella. The company is the largest digital advertiser in the world, owning the world's leading search engine, Google, and the most-watched video platform, YouTube. It also owns the world's third-largest cloud computing company and the fast-growing robotaxi business, Waymo. In addition, Alphabet was one of the first companies to develop its own custom AI chips, while last year, its Willow chip for quantum computing helped solve a major obstacle in the field. Its newest Gemini AI model, meanwhile, has been one of the best-performing on independent AI benchmarking leaderboards. While there has been some worry about AI displacing search, there have been no signs of this impacting Alphabet's search business, with revenue rising 10% in the first quarter. Meanwhile, its AI Overviews have been improving and seeing a strong reception, with it attracting 1.5 billion AI Overview users a month. The company noted that it continues to monetize its AI Overviews at a similar rate to search. Given its much higher costs, AI is likely to become complementary to search and take on a different monetization model than the ad-dominated search model. As such, free search will likely continue to play a big role in the future for both users and advertisers. With a forward P/E of 17 times, Alphabet stock is too cheap. Google Cloud and Waymo will continue to be strong growth drivers, while Google search and YouTube should continue to be nice, steady-growing businesses. Another leading tech stock in the bargain bin is Taiwan Semiconductor Manufacturing (TSM 1.45%), or TSMC for short, which trades at a forward P/E of 17.7 times and a PEG just above 0.5. The company is the leading semiconductor contract manufacturer in the world, where it produces advanced chips for customers like Nvidia. While rival foundries have struggled, TSMC has managed to become an invaluable partner to leading chip designers through its technological expertise and scale. This has allowed the company to benefit not only from increasing chip demand but also to gain strong pricing power. TSCM's strong growth could be seen in its Q1 numbers, with revenue climbing 35% to $25.5 billion, while its gross margin expanded 190 basis points year over year, and its earnings per American depositary receipt (ADR) soared 54%. As long as the AI infrastructure buildout continues, TSMC remains in a strong position. The company works closely with its top customers to increase capacity to meet their growing demands. It's building manufacturing facilities around the globe, including in the U.S., and continues to be poised to be the leader in the space. With a combination of increasing demand for its services and strong pricing power, TSMC is set to be a long-term winner.

3 Best Nasdaq Stocks to Buy in May | The Motley Fool

Despite Wall Street's optimistic outlook for big tech in 2025, most technology stocks have struggled significantly during the first four months of the year. The Nasdaq-100, which consists of the 100 largest nonfinancial companies listed on the Nasdaq stock exchange, has declined by nearly 7% year-to-date at the time of this writing. While sharp marketwide corrections can be unnerving, history consistently demonstrates that these periods often create exceptional wealth-building opportunities for investors with a long-term perspective. Currently, investors have a rare chance to acquire shares in several world-class artificial intelligence (AI) pioneers at substantial discounts to their long-term commercial potential. Specifically, the following three Nasdaq-listed tech giants present compelling buying opportunities after a challenging start to 2025. With shares down a staggering 19% year-to-date, Nvidia (NVDA -0.24%) presents an exceptional buying opportunity amid the broader tech sell-off of 2025. This correction stands in stark contrast to Nvidia's strengthening position as the foundational hardware provider powering virtually every significant AI advancement. The company's specialized graphics processing units (GPUs) have become indispensable infrastructure for AI development, creating a competitive advantage that rivals have failed to overcome. Nvidia's dominance extends beyond traditional computing into the emerging field of physical AI, where its Jetson platform enables sophisticated robotics applications that translate digital intelligence into real-world actions. This technological leadership has translated into extraordinary financial performance, with annual revenue jumping by a staggering 383% over the prior three years (see graph below). So, for investors with the foresight to look beyond current market volatility, Nvidia's recent sell-off may represent not just a stellar buying opportunity but a potential wealth-creation inflection point. After all, the AI titan will undoubtedly be a primary beneficiary of this unstoppable tech transformation, opening a multitrillion-dollar commercial opportunity for the company in the decades ahead. In stark contrast to the broader tech market decline, Palantir Technologies (PLTR 2.15%) has surged a remarkable 52% year-to-date, significantly outperforming virtually all of its major tech peers. The stock's ability to swim against the current, so to speak, is a testament to Palantir's unique positioning at the intersection of data analytics, AI, and mission-critical operations. Its demonstrated strength in a soft market serves to underscore why its stock is a standout buy this month. Palantir's software platforms, Gotham, Foundry, and Artificial Intelligence Platform (AIP), give organizations the ability to integrate massive datasets and deploy AI capabilities across their operations. What distinguishes Palantir is its proven ability to transform raw, disparate data into actionable intelligence through AI-powered analysis. Furthermore, the company has established deep relationships with government agencies and defense departments worldwide, providing a stable revenue foundation. Meanwhile, its commercial business has accelerated dramatically as enterprises across industries recognize the value of Palantir's tools for implementing practical AI solutions. With its established government relationships, expanding commercial presence, and purpose-built AI deployment platform, Palantir represents a different but equally compelling AI investment compared to hardware-focused companies like Nvidia. As a result, this red-hot tech stock should appeal to investors seeking exposure to the software and implementation side of the AI revolution even after rising in price. Among broader tech market volatility, ASML Holding (ASML 0.46%) has experienced a modest 5.2% year-to-date decline. This pullback belies ASML's critical position in the AI value chain as the sole manufacturer of the extreme ultraviolet (EUV) lithography machines required to produce the world's most advanced semiconductor chips. What makes ASML uniquely valuable is its monopoly on the equipment necessary for manufacturing the advanced chips that power AI applications. While short-term concerns about quarterly orders have weighed on the stock this year, the long-term demand signals remain extraordinarily compelling. Major chipmakers like Taiwan Semiconductor Manufacturing Company and SK Hynix are significantly increasing their capital expenditures to meet the exploding demand for AI-capable semiconductors, with TSMC raising its spending by 34% and SK Hynix reportedly boosting its 2025 investment by 30% to $20 billion. With this backdrop in mind, ASML's soft start to the year looks like a tremendous buying opportunity for investors who want exposure to a foundational AI infrastructure player.

Stock Market Sell-Off: Should You Buy the Dip on Nvidia Stock? | The Motley Fool

With shares down nearly 20% year to date, Nvidia (NVDA -0.24%) had a rough start to 2025. The massive artificial intelligence (AI) chipmaker has proven vulnerable to trade and geopolitical uncertainty during the opening months of the Trump administration, which could seriously undermine its business in China. Let's dig deeper to determine whether investors should view this dip as a buying opportunity or a signal to stay away from Nvidia stock. Nvidia's China trouble came to a head on April 16 when the Trump administration imposed new restrictions on the exports of its H20 AI chips to the country. This hardware was specifically designed to comply with Biden-era regulations, which blocked sales of its more powerful flagship chips like the A100 and H100 to China. The new ban led to a $5.5 billion impairment charge as Nvidia must now write down the value of its massive inventory and purchase commitments for the H20 program. This situation is quite complicated for Nvidia, as it offers a mix of potential advantages and disadvantages. For starters, the H20 is believed to have helped the Chinese AI start-up DeepSeek develop its R1 and V3 models, which can match American industry leader ChatGPT on some benchmarks at a fraction of the cost. Intense competition from China promises to squeeze potential margins in the AI software market, which could undermine Nvidia's biggest clients, including OpenAI, Alphabet, and Meta Platforms. As a result, these companies may become less willing to invest billions into an industry trapped in a race to the bottom. By selling H20 chips to China, Nvidia may have been hurting the long-term viability of its U.S.-reliant business model. And the chip ban may actually have a stabilizing effect on the U.S. AI industry by slowing down Chinese progress, although this theory is far from guaranteed. On April 27, Chinese tech giant Huawei announced plans to test its newest and most powerful AI processor, called the 910D, which is designed to replace Nvidia's products in the country. By banning Nvidia's H20 in China, the U.S. may have inadvertently created a less competitive environment, allowing Chinese rivals to develop their domestic chip-design capabilities and eventually imitate Nvidia's business model. The good news is that Nvidia's economic moat relies on its software solution, CUDA, which makes it easier for developers to use its chips relative to rivals. And while Huawei could eventually dominate the Chinese market, it is unlikely to challenge Nvidia's dominance outside of China anytime soon. Even experienced chipmakers like Advanced Micro Devices, Intel, and Broadcom have yet to crack Nvidia's dominance (with a market share of 70% to 95%) in the AI chip market. Over the long term, Chinese developers could use low-cost chips designed by Huawei and other companies to compete with American AI on consumer-facing software. However, the loss of access to Nvidia products could slow them down enough for Nvidia's top clients to maintain their lead. Nvidia's recent dip reflects more than just a reduction of hype in the AI industry. The Trump administration's decision to block the company's H20 sales to China will have a significant impact on its long-term growth. In fiscal 2025, Nvidia's China business accounted for approximately $7.9 billion, or 6% of its total sales of $130.5 billion, which is a substantial amount. With geopolitical tensions on the rise, it may not be in Nvidia's best interest to continue developing specialized AI chips for the Chinese market, given the risk of continued bans. That said, with a forward price-to-earnings (P/E) multiple of 25, Nvidia's valuation still looks reasonable, considering its growth rate. Fourth-quarter profits jumped 80% year over year to $19.3 billion. But stocks are only worth what someone else is willing to pay for them. Investors may doubt Nvidia's ability to sustain its epic growth rate, especially in such a speculative industry that isn't yet a significant part of the mainstream economy. Shares look like a hold until more information becomes available.

Nvidia Is Jumping Today -- Is the Artificial Intelligence (AI) Stock a Buy? | The Motley Fool

Microsoft and Meta Platforms reported quarterly results after the market closed yesterday, and strong results and guidance from both companies is helping to push Nvidia's valuation higher today. But even with today's gains, Nvidia stock is still down roughly 24% year to date as of this writing. Microsoft is reportedly Nvidia's biggest customer, and Meta is said to be the artificial intelligence (AI) hardware leader's second-biggest client. With their recent quarterly reports, Microsoft and Meta have helped bolster the bull case for Nvidia stock. In addition to posting sales and earnings beats that were heavily driven by AI technologies and services, both companies signaled that they are continuing to spend heavily on artificial intelligence processors. Microsoft reported non-GAAP (adjusted) capital expenditures (capex) of $16.75 billion in the third quarter of its current fiscal year, which ended March 31. Capex was up 53% year over year in the period. Meanwhile, the average analyst estimate had called for capex to come in at $16.37 billion. Meta's new capex forecast also brought good news for Nvidia investors. The social media giant now forecasts its capex for this year to be between $64 billion and $72 billion -- a big leap from its previous guidance for between $60 billion and $65 billion. Microsoft's and Meta's capital expenditures are heavily focused on expanding their AI infrastructures, and Nvidia's advanced processors are the key hardware that underpins success in the space. The new capex data appears to mute the significance of recent reports that Microsoft and other tech giants were scaling back their data center plans and suggests that demand for AI hardware continues to be very strong. So while Nvidia stock will likely continue to see volatility in conjunction with moves for the broader market, the long-term investment thesis appears to be intact.

Why Nvidia Stock Bounded Higher Thursday | The Motley Fool

The catalysts that sent the artificial intelligence (AI) chipmaker higher were several developments that suggest strong demand for its processors will likely continue. Microsoft (MSFT 8.57%) released its fiscal 2025 third-quarter financial report after market close on Wednesday, and investors were pleasantly surprised by the robust results. Revenue of $70 billion climbed 13% year over year, while diluted earnings per share (EPS) of $3.46 jumped 18%. Analysts' consensus estimates were calling for revenue of $68.4 billion and EPS of $3.20, so Microsoft sailed past expectations. The company credited accelerating demand for its cloud services and AI offerings for fueling its impressive growth. CEO Satya Nadella also downplayed reports that Microsoft was pulling back on data center spending, which would have been bad news for Nvidia. Meta Platforms (META 4.34%) also made a splash. In the second quarter, revenue of $42.3 billion jumped 16%, fueling EPS of $6.43, which grew 37%. The figures were well ahead of Wall Street's expectations for revenue of $41.27 billion and EPS of $5.22. The biggest surprise, however, was Meta's announcement that it is boosting its 2025 capital expenditures (capex) from its previous range of $60 billion to $65 billion to $64 billion to $72 billion. The company mentioned AI 78 times during its conference call, and some of that increased spending is earmarked for AI. As the leading supplier of the graphics processing units (GPUs) needed to support AI and data center growth, Nvidia stands to gain from this increased spending. Finally, Nvidia CEO Jensen Huang stoked excitement with comments he made in an interview with The Wall Street Journal. He posited that every American company would need to adopt AI "factories" in order to remain competitive. These virtual factories are designed to continually create AI models for specific functions and will be the "engine" that supports AI development, according to Huang. Investors have been concerned that the pace of AI adoption might be slowing, but this trio of developments suggests the road ahead is long. Furthermore, at less than 26 times forward sales, Nvidia represents an attractive way to profit from the AI revolution.

1 Artificial Intelligence (AI) Stock That Could Go Parabolic

It's been a difficult year so far for Nvidia (NVDA 4.13%). Shares were down by more than 30% at one point, wiping more than $1 trillion off the company's valuation. After a brief rebound, shares are now down by just 20% year to date. The stock isn't as cheap as it was a few weeks ago, but this is still an incredible chance for patient investors to lock in a great price for a business that should grow exponentially in the years to come. There's one reason in particular that should get investors very excited. Why Nvidia is worth $2.7 trillion Nvidia is one of the most valuable companies in the world for a reason. Its graphic processing units (GPUs) are some of the best in the world. For AI applications in particular, its GPUs are considered the best in the world. They are crucial components that make the AI revolution possible, allowing companies to train and execute large models that require huge data sets to run properly. Its next-gen Blackwell chips have performance benchmarks that few companies can match. But it's not just about raw performance. The hardware is supported by a software suite called Compute Unified Device Architecture (CUDA). CUDA allows developers to customize Nvidia's GPUs to their specific uses, unlocking performance upgrades that make the company's GPUs even more attractive. And once a customer is using CUDA, it essentially locks it into Nvidia's hardware and software, giving the chipmaker control over both ends of the value chain. In summary, Nvidia has some of the best chips on the market, especially for AI applications, and its CUDA suite creates a durable competitive advantage when it comes to customer stickiness by embedding itself directly into its customers' products from both a hardware and a software perspective. That's an incredibly valuable position considering the AI industry as a whole is expected to surpass $4 trillion by 2033, up from just $189 billion in 2023. The company's future is bright on many levels. And some recent comments from Morgan Stanley analyst Joseph Moore should get investors even more excited about its long-term prospects. There's no bubble, one analyst says The recent pullback in Nvidia's stock price stemmed from many causes. The market overall took a dive earlier this year, dragging many of the biggest names down with it. But given Nvidia's meteoric rise, many investors are also worried we're in the middle of an AI bubble, pushing valuations far beyond what is reasonable. These investors fear that even more downside is to come, but recent comments from Morgan Stanley analyst Joseph Moore should provide some relief. In a note to clients last week, Moore wrote: "The idea that we are in a digestion phase for AI is laughable given the obvious need for more inference chips which is driving a wave of very strong demand. Those who want to see this as a bubble are manifesting that through the various conversations about longer-term data center leases, but it's hard to have that view when you talk to actual customers about actual demand which remains strong." Those comments certainly line up with Nvidia's backlog figures. Many of its chips have 12-month wait lists, and there's been little sign from data center operators -- a key customer category for Nvidia's GPUs -- that spending won't grow tremendously in the years to come, even if there is some short-term noise along the way. "We are hearing about demand levels that are tens of billions above current run rates, limited by supply," Moore said in his note. NVDA PE Ratio data by YCharts; PE = price to earnings. The AI revolution is far from over. And even with a premium valuation, Nvidia still trades at just 25 times forward earnings, hardly unreasonable for a profitable company growing this quickly. With such huge demand projected for AI GPUs through this decade and beyond, don't be surprised to see Nvidia's stock continue to soar well beyond today's $2.7 trillion valuation.

Pay Close Attention to This Crucial Revenue Source for Artificial Intelligence (AI) Giant Nvidia | The Motley Fool

So where is Nvidia stock headed next, and what key metrics should investors keep a close eye on? Let's dig in and find out. Over the last three years, Nvidia's revenue has gone through the roof. In its fiscal 2022, the company generated $26.9 billion in revenue. But its trailing-12-month revenue reached $130.5 billion -- a fivefold increase from just three years ago. The engine behind this growth is Nvidia's data center unit, which generated $115.2 billion, or 88%, of the company's overall revenue in fiscal 2025. While Nvidia is miles ahead of the competition now, can its lead endure? Two major worries are hanging over Nvidia right now. One is specific to the AI industry; the other relates to trade policy. First is whether the red-hot growth of AI models and data centers will cool off. There is major disagreement on this point. Some analysts point to the emergence of DeepSeek AI as a sign that AI models will become more efficient, thus requiring less computing power and, therefore, fewer GPUs to operate. Still, other analysts believe that more efficient AI models will actually increase the need for GPUs as the barriers to building new models decrease. Whichever side you might be on, one thing is clear: The argument here is whether the growth rate in the GPU market slows, not whether the market shrinks. There is a wide consensus that the overall GPU market will continue growing for many years to come. The second issue involves trade, specifically between China and the United States. Since governments -- and militaries -- are exploring the potential of AI models, the building blocks of those models (GPUs) have become a national security issue. In particular, the United States has placed export restrictions on some of Nvidia's GPUs -- banning their direct sale to Russia and China, while limiting the number of GPUs sold to other countries such as Saudi Arabia or India. If the current U.S. export restrictions are further tightened, or if foreign countries impose retaliatory tariffs on U.S. GPUs, Nvidia's data center business could suffer. In short, trade tensions are weighing on Nvidia, even if its fundamentals remain solid. Despite that uncertainty, the stock remains attractive when focusing on said fundamentals. The stock's price-to-earnings ratio stands at 37 as of this writing, not far from the five-year low of 32 it hit in early April. Moreover, just as trade concerns and data center growth fears materialized earlier this year, they could disappear just as quickly. A change in policy from the Trump administration or another AI-related breakthrough could send the broad market -- and Nvidia stock -- back to all-time highs just as quickly as they've pulled back. So, for investors willing to hold Nvidia long term, the stock's recent weakness could prove to be an excellent buying opportunity.

Prediction: Nvidia Stock Will Skyrocket After May 28 | The Motley Fool

Nvidia (NVDA 2.33%) stock has been under pressure so far this year, losing over 19% of its value as of this writing, thanks to factors outside the company's control that have dented investor confidence in the stock despite its impressive results in recent quarters. Export controls on shipments of Nvidia's chips to foreign countries, the potential fallout of the tariff-fueled trade war, and concerns that spending on artificial intelligence (AI) infrastructure could slow down are all reasons this once high-flying chipmaker has been underperforming in 2025. However, recent developments suggest that it is on course to maintain its healthy pace of growth. In this article, we will take a closer look at the factors that could help Nvidia defy Wall Street's expectations and send the stock soaring when it releases its fiscal 2026 first-quarter results on May 28. The data center business produces a massive chunk of Nvidia's revenue, with the segment accounting for 88% of the company's top line in fiscal 2025 (which ended on Feb. 26). So, the health of this business plays a central role in determining Nvidia's financial performance. The good part is that the recent quarterly results from its semiconductor peers suggest that the demand for AI-focused data center chips remains strong. Taiwan Semiconductor Manufacturing (TSM 3.68%), popularly known as TSMC, released its first-quarter 2025 results in April and said that it expects revenue from sales of AI chips to double this year. Nvidia gets its chips manufactured by TSMC, and the latter points out that it hasn't seen any change in customers' behavior despite the tariff-related uncertainty. Moreover, TSMC reiterated its 2025 capital expenditure guidance of $38 billion to $42 billion. The company points out that it will spend 70% of that budget on advanced process technologies that will help it meet the strong demand for AI chips. Also, it is expecting a slight acceleration in revenue growth in the current quarter, and that bodes well for Nvidia since it is one of the largest customers of the Taiwan-based foundry giant. And semiconductor manufacturing equipment supplier Lam Research also delivered impressive results recently that beat expectations. The company had strong guidance that was well ahead of expectations, signaling an improvement in growth from the robust demand for AI chips. What's more, Lam is anticipating its top line to increase by around 63% over the next four years, suggesting that it expects the favorable demand to continue. The concerns about a potential drop in AI infrastructure spending may be overblown, as evident from the recent news from key cloud service providers. Alphabet, for instance, says that it became the first cloud provider to offer Nvidia's latest Blackwell processors. Moreover, the Google parent has reaffirmed its $75 billion capital expenditure forecast for 2025, which would be an increase of 43% from last year, as it looks to shore up its AI capabilities by investing in the latest hardware. Oracle has started deploying Nvidia's Blackwell processors as well to power its cloud infrastructure and meet the growing demand for reasoning models and agentic AI applications. The company intends to build Oracle Cloud Infrastructure (OCI) Superclusters that will be equipped with more than 100,000 Blackwell graphics cards. And the GPU leader is on track to win big from the $500 billion Project Stargate, led by OpenAI and SoftBank. Nvidia is expected to supply 400,000 of its AI chips for the first Stargate data center. It sells the base variant of its Blackwell B200 chip for $30,000 to $40,000 apiece, so it could witness a massive boost in its business as the Stargate Project is scaled up to its full size of 10 AI data centers. In all, it looks like the demand for Blackwell processors that Nvidia started selling in the fourth quarter of fiscal 2025, generating $11 billion in revenue, is set to move the needle in a bigger way for the company when it releases its results on May 28. Management has called for $43 billion in revenue for the first quarter of fiscal 2026, a jump of 65% from the prior year. The ramp-up in production of advanced AI chips by its foundry partner TSMC along with the deployment of the Blackwell chips by major cloud service providers suggest that it could indeed meet or even exceed its expectations. An earnings beat along with better-than-expected guidance could turn out to be the much-needed catalyst for Nvidia stock, and the company seems ready to deliver on both fronts based on the points discussed above. That's why buying this AI stock before its upcoming earnings report could turn out to be a smart move considering that it trades at an attractive 25 times forward earnings right now.

Does Seaport Research Know Something the Rest of Wall Street Doesn't? Analysts There Just Gave Nvidia a Sell Rating. | The Motley Fool

Nvidia (NVDA 2.33%) stock has slipped in recent times along with many other stocks -- especially technology players -- as investors worried about the impact of President Donald Trump's tariffs on imports. Though electronics products are exempt for the moment, the president has said he will soon announce a specific level of tariffs for the tech industry. So, tariffs do remain a risk for U.S. companies, though this doesn't change the long-term growth story for many well-established players -- such as Nvidia. The artificial intelligence (AI) boom continues, with companies continuing major investments to build out infrastructure, and as the chip leader, Nvidia stands to benefit. That's why analysts overwhelmingly rate Nvidia a buy and the average forecast calls for Nvidia stock to climb almost 50% over the coming 12 months. Yet, this week, Seaport Global Securities stepped away from the crowd by initiating coverage of Nvidia with a sell rating and predicting the stock will fall slightly from its current level. Does Seaport know something the rest of Wall Street doesn't? Let's find out. First, a quick summary of the Nvidia story. This tech giant has built dominance in the area of AI chips, designing the world's most powerful graphics processing units (GPUs) to power crucial AI tasks. Such tasks include training and inferencing, the procedures that give large language models the capabilities to solve complex problems. Nvidia also has built a full portfolio of related products and services to accompany customers on their complete AI journey. So, Nvidia can help a customer build an AI platform and make use of it. All of this has helped the tech powerhouse to generate double- and triple-digit revenue growth in recent years, reaching a record level of annual revenue -- $130 billion -- last year. And this is at a high level of profitability on sales as Nvidia has maintained gross margin higher than 70%. Meanwhile, the current concerns about tariff impact across U.S. companies and industries has left Nvidia stock trading close to its lowest level in relation to forward earnings estimates in about a year. The stock today has a forward price-to-earnings ratio of 24. On top of this, forecasts for a $2 trillion AI market by the early 2030s along with companies such as Alphabet saying they plan on investing billions to support AI development suggest this growth story is set to continue. So, it's not surprising Wall Street is optimistic about Nvidia's future and encourages investors to get in on the shares. Now, let's consider Seaport's view. The firm set a $100 price target for the stock, implying a 7% decline from the April 30 closing price, and said Nvidia's AI prospects are priced in at the current level. The firm cited the complexity of deploying Nvidia's systems, customers' moves to develop their own chips, and the idea that customers may look closely at their AI spending in relation to potential use cases for the technology. Seaport doesn't see a bubble scenario here but does predict a slowdown in customers' AI budget growth. So now let's get back to our question: Does Seaport know something the rest of Wall Street doesn't, and if so, could Nvidia be heading for declines? Seaport makes valid points, but Nvidia has indicated that it's in the AI business for the long haul. In fact, when speaking about the U.S. and China's work in AI at a tech conference this week, according to CNBC, Nvidia CEO Jensen Huang said, "Remember this is a long-term, infinite race." It's very difficult to predict short-term trends during this long race. Nvidia could face hurdles at certain moments as it rolls out complex products, though its recent Blackwell launch so far has been successful. And Nvidia customers are developing their own chips but have spoken of the importance of ongoing work with Nvidia products too. All of this means that, though it's possible Seaport is right about Nvidia's performance in the months to come, this doesn't necessarily change the long-term picture. And that's why, regardless of short-term movements, it's still a great idea to buy Nvidia now and hold on to this winning AI stock as the AI growth story enters its next chapters.

Chip Demand Could Be Slowing, but Does That Make Nvidia Stock a Sell? | The Motley Fool

The stock earned massive gains in 2023 and 2024 as its role in ChatGPT's artificial intelligence (AI) breakthrough made it the undisputed leader in the AI accelerator industry. So successful are its products that AI accelerators now generate nearly all of the company's revenue. More recently, Nvidia pulled back from record highs following the news of the DeepSeek breakthrough earlier this year. And signs of falling demand and rising competition cast further doubts on the stock's near-term direction. Do all of these doubts make the stock a sell? Let's take a closer look. Nvidia's current state arguably makes it look like a sell in the near term. Aside from DeepSeek's breakthrough in lowering the cost of AI, new challenges are emerging. One is political, as rules imposed by the Trump administration could stop it from exporting some of its products to other countries. Another is competitive, since many of the company's largest customers have looked into designing AI chips in-house, which could bode poorly for the company. Moreover, the state of one of its more prominent customers, Super Micro Computer, cast doubt on Nvidia's near-term prospects. Supermicro, which uses Nvidia's AI accelerators in many of its servers, cut its outlook amid what it calls "delayed customer platform decisions." This is a problem for Nvidia, as the data segment that designs its AI accelerators accounted for $115 billion of the company's $130 billion in revenue in fiscal 2025. The company's revenue increased 114% in the fiscal year, but its sales outlook for the first quarter of 2026 would already mean a deceleration to 65% growth, and the company may have to scale back such estimates further as customer demand falls. That might mean its price-to-earnings ratio (P/E) of 36 is not the bargain it appears to be. And investors could rethink the company's valuation given the price-to-book ratio of 33, which is well above the S&P 500 average of 4.8. However, despite its challenges, investors have good reason to believe the pessimism is overdone. For all of the concerns, AI demand remains high. Grand View Research estimated the compound annual growth rate (CAGR) for the AI chip market at 29% through 2030. So, even if industry growth faces a temporary disruption right now, it is likely to continue and possibly reaccelerate as the uncertainty recedes. Moreover, Nvidia retains its dominant market share, particularly with the most advanced AI chips. Estimates place its market share as 85%, indicating that competitors are not having much success challenging the company. Furthermore, companies that try to compete not only have to match Nvidia's Blackwell architecture but also must have an answer for its next-generation chip, Rubin, which it plans to release in 2026. Even if peers catch up to its less advanced chips, Nvidia is still likely to dominate on the leading edge. Indeed, revenue hikes will slow since triple-digit increases are not sustainable over time. Nonetheless, growth is unlikely to stop, and that means net income can still grow rapidly. As stated before, its P/E ratio is 36, and the estimated forward P/E of 24 indicates its profits will continue to rise. With a forward P/E so low, the continued increases should eventually take the stock higher, even if some of the worst fears about Nvidia's near-term future are realized. Given the state of Nvidia, the party is probably not over, and the stock is more likely a hold than a sell. Admittedly, investors need to brace for revenue growth to slow down rapidly. While the company and its investors have enjoyed triple-digit increases in recent quarters, it's unrealistic to expect Nvidia would ever continue that rate of growth in the long run. With more companies pausing their spending, it is unclear how rapidly that growth will decelerate. However, such concerns are unlikely to derail its growth story over the longer term. As the company leads the lucrative AI industry, Nvidia should continue to drive outsize shareholder returns over time.

5 No-Brainer AI Stocks to Buy in May | The Motley Fool

Artificial intelligence (AI) may be the most transformative technological revolution since the advent of the internet. Economic forecasts project that AI could add $15.7 trillion to the global economy by 2030, fundamentally reshaping industries from healthcare and finance to manufacturing and entertainment. Unlike previous technological shifts, AI's unique capacity for autonomous learning, decision-making, and problem-solving creates exponential value across virtually every sector of the economy. This unprecedented economic potential has ignited a global race for AI dominance among corporations and nations alike. For investors seeking exposure to this technological revolution, the following five companies represent compelling opportunities. Read on to find out more about these incredible AI pioneers. Advanced Micro Devices (AMD -1.61%) is gaining ground on Nvidia with its new MI325X AI accelerator, boasting massive memory bandwidth and strong generative AI performance. Microsoft plans to deploy the chip across its Azure cloud, giving AMD a powerful boost in visibility and adoption. With demand for AI infrastructure surging and AMD offering a more cost-effective alternative to Nvidia's H100 and H200, this stock stands out as a high-upside pick in the accelerating AI race. Amazon.com, Inc. (AMZN -0.48%) continues to lead in AI infrastructure through its Amazon Web Services (AWS) division, which reported $29.3 billion in revenue for first-quarter 2025, marking a 17% year-over-year increase. AWS has expanded its AI offerings with its Nova family of models, including Nova Premier for complex reasoning tasks and Nova Sonic for speech-to-speech applications, enhancing its capabilities across both text and multimodal AI domains. In the consumer space, Amazon has integrated generative AI features across its platforms, with Nova Sonic already powering elements of Alexa+ and the widely available Rufus shopping assistant. Nova Sonic particularly stands out for its ability to understand speech in different speaking styles while generating natural-sounding responses, with Amazon claiming it achieves 46.7% better accuracy than competing models in noisy environments and maintains lower operating costs. With AWS positioned to grow beyond a "multi-$100-billion-dollar revenue run rate business" due to AI, according to CEO Andy Jassy, Amazon remains exceptionally well-positioned to capitalize on the growing demand for AI solutions across both enterprise and consumer markets. ASML Holding N.V. (ASML -0.24%) is the sole manufacturer of extreme ultraviolet (EUV) lithography machines, which are critical for producing the most advanced semiconductors used in AI applications. These machines enable the creation of chips with extremely fine features, essential for high-performance AI processing. ASML's unique position in the semiconductor supply chain makes it a pivotal player in the AI industry, regardless of which chip designers lead the market. Its functional monopoly on EUV lithography also gives the company a formidable economic moat. Applied Digital Corporation (APLD 0.97%) develops high-performance data centers tailored for AI workloads. These facilities are built to support dense deployments of graphics processing units (GPUs), which are essential for large-scale model training and inference. The company is expanding aggressively, with new campuses engineered for energy efficiency and advanced cooling. As demand for AI compute surges across sectors, Applied Digital is positioned to benefit by providing scalable, cost-effective infrastructure to enterprise and cloud clients. This makes it a compelling infrastructure-level play in the AI buildout. Meta Platforms, Inc. (META -1.84%) has shifted from an AI underdog to a front-runner with the release of its Llama 4 family of open-source models. The company's new multimodal systems -- Llama 4 Scout and Maverick -- can process text, images, video, and audio, and a larger "Behemoth" model is in training to rival the best in class. This surge in AI development is translating to real-world results. Meta AI now serves nearly 1 billion monthly active users across all Meta platforms combined, while WhatsApp's total user base exceeds 3 billion monthly users. WhatsApp has emerged as the primary platform where users engage with Meta AI, driving most one-on-one AI interactions. In April 2025, Meta launched a stand-alone Meta AI app, signaling its intent to compete head-on with OpenAI and Alphabet. The bottom line? Meta is well-positioned to lead in consumer AI -- and that fact makes its stock an attractive buy right now.

Meta, Microsoft, Alphabet, and Amazon Just Delivered Incredible News for Nvidia Stock Investors | The Motley Fool

Like much of the stock market, Nvidia (NVDA -0.64%) has experienced significant volatility in 2025. Even after recovering some of its losses, the stock remains down 15% year to date. Investors are concerned that President Donald Trump's tariffs could reduce demand for the company's data center chips, which are the best in the industry for developing artificial intelligence (AI) applications. Although semiconductors are exempt from the most aggressive tariff policies, many of Nvidia's customers still face increased costs and potential sales declines, which could force them to reduce their capital expenditures (capex). Meta Platforms (META 0.34%), Microsoft (MSFT 0.15%), Alphabet (GOOG 0.14%) (GOOGL 0.12%), and Amazon (AMZN -1.95%) are four of the biggest buyers of Nvidia's AI chips, and they just gave Nvidia investors a positive update on their planned AI spending for this year. Nvidia's H100 graphics processing unit (GPU) was the industry's dominant AI data center chip throughout 2023 and for most of 2024. It was based on the company's Hopper architecture, which has been superseded by the higher-performing Blackwell and Blackwell Ultra architectures. In fact, the new Blackwell Ultra GB300 GPU can perform AI inference up to 50 times faster than the H100 in specific configurations, which is important for developers of next-generation "reasoning" models. Traditional large language models (LLMs) deliver one-shot responses, providing users with fast and convenient access to information, but they often make mistakes. Reasoning models spend more time "thinking" in the background to clear up as many errors as possible before generating a response. This means they make better use of the data they already have, which reduces pre-training workloads (endlessly feeding more data into models to make them "smarter"). But since reasoning models use up more tokens (words, symbols, and punctuation) during the thinking process and are slower to generate responses, Nvidia CEO Jensen Huang says they need up to 100 times more computing power than traditional models to maintain a convenient user experience. Blackwell Ultra chips (which will ship to customers in the second half of 2025) are a step in the right direction, but developers are already eyeing Nvidia's next-generation Rubin GPUs, which are expected to deliver a further 3.3 times more compute performance. Rubin GPUs will pave the way for the most powerful reasoning models to date, and they are slated for release in 2026. Simply put, Nvidia is investing heavily in innovation to continue driving the AI industry industry forward for the long term, which is why investors are so anxious for proof that demand is holding up. Nvidia is an American company, but the majority of its chips are fabricated offshore by Taiwan Semiconductor Manufacturing, so they are technically imported products. However, Trump exempted semiconductors from his "Liberation Day" tariffs on imports, as he understands the importance of keeping the U.S. at the forefront of AI technology. The bigger concern is the effect of tariffs on Nvidia's customers. They are spending tens of billions of dollars per year on AI chips and data center infrastructure, so any slowdown in their core operations could force them to pull back. Tariffs apply to physical goods, so a company like Amazon will take a hit because it draws part of its revenue from its e-commerce platform, which imports retail products from other countries. However, Amazon's cloud services platform, digital advertising business, and streaming segment aren't directly subjected to tariffs because they offer digital products and services. Other Nvidia customers like Meta, Microsoft, and Alphabet also primarily sell digital products and services, so they could weather the global trade tensions better than most companies. As a result, they each delivered reassuring news for Nvidia investors when they reported their financial results for the first quarter (ended March 31): The dip in Nvidia stock has created a fantastic buying opportunity for investors too. The stock currently trades at a price-to-earnings (P/E) ratio of 39, which is a significant discount to its 10-year average and median, both of which are above 50. Nvidia generated $115.2 billion in data center revenue during its fiscal 2025 (ended Jan. 26), which was an eye-popping 142% increase from the prior year. But Huang predicts that data center spending will top $1 trillion annually by 2028 as reasoning models demand even more computing power, so the company still has a long potential growth runway. Data center operators like Meta, Microsoft, Alphabet, and Amazon typically plan their infrastructure spending years in advance, even if they only offer guidance for the coming 12 months. Therefore, they might be willing to look past any short-term slowdown in the economy from the tariffs and global trade tensions. That's likely why they haven't reduced their capex forecasts. Plus, demand for Nvidia's chips is outstripping supply, so companies can't afford to cancel orders because they would risk falling behind in the AI race. As a result, Nvidia stock looks like a great buy at the current price, especially for investors who are willing to stay the course until 2028 and beyond.

Here Is My Top Artificial Intelligence (AI) Stock to Buy in May | The Motley Fool

Some investors who didn't buy artificial intelligence (AI) stocks last year may have worried that they missed their chance. Many of these stocks had soared, with valuations reaching sky-high levels, on optimism the technology would be the next big game changer -- as the internet was many years ago. In recent times, though, these top-performing stocks not only have taken a pause; in some cases they've actually plummeted. The good news is that this stock movement isn't a reflection of AI's potential. The market remains compelling, and analysts forecast it may reach beyond $2 trillion in the coming decade. Instead, these recent stock price declines are linked to general concerns about the economy and earnings growth in the near term. Investors worry that President Donald Trump's move to impose tariffs on imports could increase prices and eventually hurt the overall economy. So, even though companies in most industries could face challenges in the quarters ahead, there's reason to be optimistic about strong, well-established players. They have what it takes to manage difficult times and go on to grow. And all of this offers investors a fresh opportunity to get in on AI stocks at reasonable prices. With this in mind, one AI company in particular makes a fantastic buy right now in the month of May. This player jumped into the market right away, bringing its chips to AI customers before the AI boom took off, and it's demonstrated an impressive ability to evolve and innovate over time. I'm talking about chip giant Nvidia (NVDA -0.64%). In the company's early days, it generated most of its revenue by selling its graphics processing units (GPUs) to the gaming market, but in recent years, sales of GPUs and related products and services to AI customers have made up the greatest share of revenue. In fact, in the most recent quarter, AI-related sales made up 90% of overall revenue. Nvidia dominates the AI chip market because its GPUs offer customers speed, efficiency, and other features that make them the best available. They also are the priciest, but customers such as Meta Platforms and Microsoft, for example, are eager to build the strongest of platforms, so they're willing to pay to reach their goals. Nvidia, to maintain dominance, has put a big focus on innovation. The company pledges to update its GPUs annually and already has set out its road map for the coming two years. Over the past couple of years, the AI boom has helped Nvidia generate double- and triple-digit revenue growth quarter after quarter. I like the fact that this is accompanied by a solid level of profitability, with gross margin surpassing 70% even during times when expenses are higher -- such as during the recent rollout of the Blackwell architecture and chip. It's clear to me that Nvidia makes a great long-term AI investment. But why is now in particular a good time to buy? Nvidia has a couple of potential near-term catalysts in the form of its fiscal first-quarter 2026 earnings report on May 28 and its shareholder meeting on June 25. The company just launched Blackwell this winter, and in its first quarter on the market it generated $11 billion in revenue. Demand for the platform has been high, so it's possible Nvidia will report another quarter of strong revenue, and that could offer the stock a boost in the near term. And though Nvidia faces challenges, such as potential tariffs on imports and a U.S.-imposed halt on exports to China, the company has shown signs of finding solutions to its problems. For example, Nvidia recently launched an investment in U.S. manufacturing, and press reports suggest Nvidia aims to rework design of a chip to suit U.S. export rules. Any progress on projects aiming to beat those challenges could lift Nvidia stock price. If you buy Nvidia now, you'll get in on the stock at close to its lowest in a year in terms of price-to-forward earnings estimates. The stock is trading for 25 times earnings estimates, down from more than 48 times earlier this year. All of this means that by investing in Nvidia shares before May 28, you'll get in on the stock at a bargain price and potentially benefit from some near-term catalysts. And here's the really good news: Even if the stock doesn't take off right away, it's still positioned for a win over time thanks to Nvidia's dominance and innovation in the high-growth AI market.

Nvidia Investors Just Got Incredible News From AMD CEO Lisa Su | The Motley Fool

Artificial intelligence (AI) stocks have been treading water in recent months over fears of slowing AI adoption. AMD just put those concerns to rest. The accelerating adoption of artificial intelligence (AI) was largely credited with sparking the current bull market that has been running riot for more than two years. Over the past few months, however, investors have become increasingly concerned that the impact of tariffs and the potential for slowing adoption could stymie the rally that has lifted many AI stocks to new heights. Take Nvidia (NVDA -0.02%) for example. In the company's fiscal 2025 fourth quarter (ended Jan. 26), Nvidia delivered revenue of $39.3 billion, which soared 78% year over year, while its earnings per share (EPS) of $0.89 soared 82%. While results of that magnitude would be enough to send most stocks soaring, Nvidia turned south and is down roughly 14% since the report was released. In the ensuing months, investors have been seeking assurances that AI adoption remains high. Enter Advanced Micro Devices (AMD -1.61%) CEO Lisa Su, who just delivered incredible news for Nvidia investors. AMD reported its first-quarter results after market close on Tuesday, and investors were pleasantly surprised. The chipmaker generated record revenue of $7.4 billion, up 36% year over year, while its adjusted EPS of $0.96 jumped 55%. To put those results in context, analysts' consensus estimates were calling for revenue of $7.12 billion and EPS of $0.93, so AMD cleared both hurdles with room to spare. The biggest contributor to the results was strength from AMD's data center segment, as revenue of $3.7 billion jumped 57% year over year. The client and gaming segment delivered revenue of $2.9 billion, up 28%. While client revenue of $2.3 billion rallied 68%, gaming revenue of $647 million remained in a secular slump, down 30%. The company also boasted an expanding gross margin of 50%, up 300 basis points from 47% in the prior year quarter, thanks to higher data center revenue and a favorable product mix. AMD also provided a robust outlook for the second quarter, forecasting revenue of $7.4 billion at the midpoint of its guidance, well ahead of the $7.24 billion predicted by analysts. Of the results, CEO Lisa Su said (emphasis mine), "We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter, driven by strength in our core businesses and expanding data center and AI momentum." That news bodes well for Nvidia. Beyond the good news for AMD investors, the results have broader implications across the tech space. Over the past couple of years, the pace at which generative AI has evolved has been dizzying, adoption remains high, and the availability of the technology has never been greater. Recent commentary from every corner of big tech suggests the buildout of data centers needed to support the technology continues at a frantic pace. So, what does this have to do with Nvidia? The company is the leading provider of graphics processing units (GPUs) that speed AI through the ether. While estimates vary, Nvidia controlled as much as 98% of the data center GPU market over the past couple of years. While the competition has increased, the market continues to grow, making Nvidia the odds-on favorite to profit from this once-in-a-generation paradigm shift. The popular narrative in recent months has been that the adoption of AI is slowing, despite evidence to the contrary. Most experts suggest that AI will generate trillions of dollars over the coming five to 10 years, but estimates vary wildly. The generative AI market is expected to be worth $1.3 trillion by 2032, according to a report by Bloomberg Intelligence. McKinsey & Company is even more bullish, calculating that generative AI could add the equivalent of between $2.6 trillion and $4.4 trillion to the global economy over the coming decade. Not to be outdone, Big Four accounting firm PricewaterhouseCoopers (PwC) values the potential contribution of generative AI to the global economy at $15.7 trillion by 2030. The twin takeaways from this exercise are that no one knows for sure how big generative AI will ultimately be, and the market opportunity is significant. Fears about the slowing adoption of AI, the uncertainty wrought by global tariffs, and a moratorium on sales to China have weighed heavily on Nvidia, with the stock down 16% (as of this writing) since the start of 2025. The falling stock price, combined with the company's accelerating profits, creates a compelling opportunity for investors, as Nvidia is selling for just 26 times forward earnings, an attractive price for a company at the heart of the AI revolution.

Prediction: 5 Stocks That'll Be Worth More Than Artificial Intelligence (AI) Stock Nvidia 3 Years From Now | The Motley Fool

If the AI bubble bursts, five highly influential, market-leading businesses can leapfrog Nvidia in value. Since the start of 2023, there hasn't been a hotter trend on Wall Street than the evolution of artificial intelligence (AI). Empowering software and systems with tools that allow them to reason and act on their own, and potentially even learn new jobs and skillsets without the need for human oversight, is a game-changing innovation with a big addressable market. While estimates of just how much AI can contribute to economic growth are all over the map, PwC pegged its global addressable market at a cool $15.7 trillion by 2030. If the actual impact of artificial intelligence is anywhere in the ballpark of this figure, there are going to be multiple winners. Thus far, no company has more directly benefited from the rise of AI than Nvidia (NVDA -0.02%). Its valuation climbed from $360 billion to end 2022 to well north of $3 trillion in less than two years. Nvidia's Hopper (H100) graphics processing unit (GPU) and next-generation Blackwell GPU architecture have been the preferred chips used by businesses wanting to be on the leading edge of AI innovation. But there's also a realistic chance Nvidia is in a bubble, which would allow other influential businesses nipping at its heels to leapfrog it in the valuation department. To begin with, there hasn't been a game-changing innovation, technology, or trend for more than three decades that's avoided a bubble-bursting event in its early expansion phase. This is to say that investors frequently overestimate early adoption rates and the broad-based utility of highly touted technologies and innovations. Eventually, it leads to lofty expectations not being met. If an AI bubble were to form and burst, it would undoubtedly hit Nvidia stock hard. Competition is also mounting in the AI-GPU space -- albeit from an unlikely source. Though direct competitors are ramping up production of high-powered chips for enterprise data centers, the biggest worry might be that most of Nvidia's top customers by net sales are internally developing chips of their own to use in their data centers. Even if these AI-GPUs lack the compute potential of Nvidia's hardware, they'll be notably cheaper and not backlogged. There's a very real possibility of Nvidia losing out on future orders, or at the very least losing its premium pricing power. I'd expect these headwinds to weigh down Nvidia stock over the coming three years and allow the following five companies to surpass its market cap. Note, I'm excluding Microsoft and Apple since their market caps are already higher than Nvidia, as of this writing. The likeliest of all companies to surpass Nvidia's valuation at some point over the next three years is e-commerce colossus Amazon (AMZN -0.48%). I'd argue Amazon is on a trajectory that could make it the largest publicly traded company by the turn of the decade. While most people are familiar with Amazon because of its globally dominant online marketplace, its growth engine is primarily tied to its cloud infrastructure service platform, Amazon Web Services (AWS). AWS accounted for a third of all cloud infrastructure service spend during the fourth quarter of 2024, based on estimates from Canalys. More importantly, it's growing by a high-teens percentage on a year-over-year basis, with $117 billion in high-margin, annual run-rate sales. Amazon's other high-growth ancillary segments aren't slouches, either. Being one of the premier social media destinations has made it an advertising rockstar. Even in a challenging economic environment, advertising services revenue is climbing by nearly 20% on a constant-currency basis. When coupled with the exceptional pricing power of Prime subscriptions, Amazon has the tools to generate outsized cash flow growth over the next three-to-five years, if not well beyond. Google parent Alphabet (GOOGL -0.42%) (GOOG -0.34%) is a second stock that has the catalysts to leapfrog Nvidia in the next three years. Similar to Amazon, Alphabet is leaning on its cloud infrastructure service platform (Google Cloud) to ramp up its growth potential and operating cash flow. Google Cloud is incorporating artificial intelligence to give its clients access to generative AI solutions and large language model tools. This high-margin segment has been recurringly profitable for Alphabet since 2023, and is generating around $49 billion in annual run-rate sales, as of the March-ended quarter. But even though Alphabet is relying on AI to supercharge its high-margin growth rate, it has a foundational cash cow to fall back on in the event the AI bubble bursts. Google operates as a near-monopoly in global internet search, with just shy of a 90% share, as of April 2025, per GlobalStats. Disproportionately long economic growth cycles, coupled with Google's near-monopoly status, makes this segment a sustainable cash generator for Alphabet. If there's such a thing as a logical choice to surpass Nvidia's market cap in the coming three years, social media titan Meta Platforms (META -1.84%) certainly fits the bill. Meta is an ad-driven business -- even more so than Alphabet. Whereas the latter generated 74% of its net sales in the March-ended quarter from advertising, Meta's social media destinations brought in just shy of 98% of its $42.3 billion in total revenue from ads in the first quarter. No other social media company is particularly close to attracting the 3.43 billion daily active people that Meta averaged in March 2025. Having ultra-popular platforms, including Facebook, WhatsApp, Instagram, Threads, and Facebook Messenger ensures that businesses will pay a premium to get their message(s) in front of users. Meta Platforms is also sitting on an enviable treasure chest of capital. It closed out March with $70.2 billion in cash, cash equivalents, and marketable securities, as well as generated north of $24 billion in net cash from operations in the first three months of 2025. This cash affords Meta the luxury of slow-stepping the development of potentially game-changing innovations, such as the metaverse. Though it's the longshot on this list, based on its current market cap of "just" $666 billion, payment facilitator Visa (V -0.08%) has the necessary catalysts to leapfrog Nvidia, when combined with the latter's headwinds. Visa's sustained double-digit sales and earnings growth rate is a function of its being the dominant player in payment processing domestically, as well as having a potentially multidecade expansion runway in overseas markets. According to data collected by eMarketer, Visa handled about $6.45 trillion in credit card network purchase volume domestically in 2023. This was nearly $2.4 trillion more than No.'s 2 through 4 in market share, combined. Aside from generating consistent merchant fees in the U.S., cross-border payment volume has been continually growing by a double-digit percentage. Visa has the capital and cash flow to organically or acquisitively enter faster-growing (and chronically underbanked) emerging markets. Last but certainly not least, I fully expect the steady tortoise to beat the hare. While Nvidia's stock went parabolic in 2023 and 2024, it's Warren Buffett's Berkshire Hathaway (BRK.A 0.06%) (BRK.B 0.18%) that's managed a nearly 20% annualized return over six decades. If Berkshire stuck to this trajectory, it could become a $2 trillion company by the midpoint of 2028. One of the reasons Berkshire Hathaway is such a success is Buffett favoriting cyclical businesses. Whether it's companies he's acquired or invested in, the Oracle of Omaha favors businesses that ebb-and-flow with the U.S. economy. Buffett rightly recognizes that, even though recessions are inevitable, economic expansions last significantly longer than downturns. Thus, he's positioned Berkshire's investment portfolio and five dozen owned businesses to take advantage of these lengthy periods of U.S. growth. Additionally, Warren Buffett loves putting Berkshire's cash to work in companies with robust capital-return programs. Berkshire Hathaway should have no trouble collecting in excess of $5 billion in dividend income over the next year. In The Power of Dividends: Past, Present, and Future, the researchers at Hartford Funds, in collaboration with Ned Davis Research, showed that dividend stocks crushed non-payers in the return column over the last 51 years (1973-2024): 9.2% (annualized) for dividend stocks vs. 4.31% (annualized) for non-payers. Relying on dividend stocks suggests Berkshire's investment portfolio is going to outperform over the long run.

Prediction: This Artificial Intelligence (AI) Stock Could Be Worth More Than Nvidia by 2030 | The Motley Fool

Nvidia has added over $2 trillion in market value over the last two years, and is currently the third-most valuable company in the world. Artificial intelligence (AI) has become a major tailwind for technology businesses over the last couple of years. But just how big of a factor is the AI boom for the world's largest enterprises? Consider semiconductor powerhouse Nvidia (NVDA -0.02%) as a prime example. Exactly two years ago, Nvidia's market capitalization was $700 billion. Today, it is worth north of $2.7 trillion -- trailing only Microsoft and Apple as the world's most valuable companies. Over those same two years, e-commerce and cloud computing behemoth Amazon (AMZN -0.48%) added just shy of $1 trillion to its own market value. While Amazon trails Nvidia's valuation today, I think the company could be worth much more than the semiconductor giant by next decade. Let's explore how Amazon's business is transforming thanks to the AI revolution. More importantly, I'll break down why I think the stock is a no-brainer buying opportunity right now for investors to buy and hold for the long term. Amazon reports its revenue across six major categories: online stores (e-commerce), physical stores, third-party seller services, advertising, subscriptions, and Amazon Web Services (AWS). E-commerce, brick-and-mortar storefronts, and third-party seller services all touch the retail industry where Amazon has its roots. Over the years, the company did a good job of branching out beyond retail and getting involved in higher-margin opportunities through advertising, Prime subscriptions, and cloud computing (AWS). While AI has the potential to disrupt all of Amazon's operational segments, AWS and retail are the two that have me most encouraged. On the retail side, Amazon is investing heavily in AI robotics. Essentially, the company is outfitting its fulfillment centers with robotic processes that can bring a new level of automation and efficiency to packaging and shipping services. In turn, Amazon should be able to reduce labor costs in its warehouses over time, resulting in greater profitability for its core retail operation. Over the last couple of years, AWS has been going through something of a renaissance thanks to its $8 billion investment into AI start-up Anthropic. Amazon first partnered with Anthropic in September 2023. At the end of 2023's third quarter, AWS was operating at a $92 billion annual revenue run rate and with an operating income margin of roughly 30%. As of the end of 2025's first quarter, AWS' revenue run rate is over $117 billion while its operating income margin is nearly 39%. That combination of accelerating revenue and widening profit margins is lucrative. Amazon is also making some major moves to bolster the AWS platform -- notably through the development of custom chipsets and heavy investments in data center infrastructure. Amazon is in the early phases of developing its own AI chips. Its "Magnificent Seven" cohorts Microsoft, Meta Platforms, and Alphabet are pursuing similar ambitions. While I don't think this will be catastrophic for Nvidia, it likely won't help it in the long run. As it stands today, each of these megacap technology companies works closely with Nvidia. But as more high-end AI chip options enter the market, theoretically, these businesses won't need to rely on Nvidia as heavily. Already, its chipmaking rival Advanced Micro Devices has already been able to win over the likes of Oracle, Meta, and Microsoft as major buyers of its own competing GPUs, so investors might want to prepare for less robust growth in Nvidia's sales and profits down the road. If the introduction of more chips that rival its GPUs ends up becoming a headwind for Nvidia, and if its revenue and profit gains become less inspiring for growth investors, then I think it's highly likely that the company's valuation multiples could compress. On the flip side, Amazon appears to be in the early stages of taking advantage of new opportunities for accelerated growth, particularly in AWS and its retail marketplaces. Nevertheless, Amazon's valuation trends suggest that investors are not yet placing much of a premium at all on the company's efficiency improvements or their long-run potential. When you account for how much the company's operating profits have grown over the last several years relative to its market cap gains, Amazon looks dirt cheap. If it keeps up its current trajectory, though, the company should be in a position to continue accelerating sales while minting billions in cash flow in the process. This has me optimistic that Amazon's valuation could begin to witness notable expansion over the next several years relative to peers such as Nvidia -- ultimately becoming a much larger company by 2030.

3 AI Stocks That Are Screaming Buys in May | The Motley Fool

Although many artificial intelligence (AI) stocks aren't as cheap as they were in March or April, plenty of AI stocks look like strong bargains at these price points. We're still in the early innings of deploying AI throughout business and our lives, and it's clear that there's a ton more room to go before this build-out is complete. As a result, the current dip is temporary and gives investors a great opportunity to scoop up shares of some top AI picks at a discount. Three stocks that I think are excellent values right now in the AI realm are Nvidia (NVDA -0.02%), Taiwan Semiconductor (TSM -2.26%), and Alphabet (GOOG -0.34%) (GOOGL -0.42%). Nvidia graphics processing units (GPUs) have largely been the computing muscle behind the training and operation of AI models. Nvidia's GPUs are best in class, which is why most analysts estimate that Nvidia has a 90% or greater market share in the data center GPU space. This dominance allowed Nvidia's revenue and profits to soar over the past few years, but it's just getting started. In 2024, third-party data provided by Nvidia estimated that there were $400 billion in data center capital expenditures. That data also projects that the figure will increase to $1 trillion by 2028. That's monster growth in a short time frame, and with the vast majority of data centers being outfitted with Nvidia GPUs, they're primed to benefit. Despite that long-term growth, Nvidia only has about a year's worth of growth priced into the stock. While 39 times earnings looks expensive (and is expensive), 26 times forward earnings isn't nearly as bad. If all projections come true, the forward price-to-earnings (P/E) ratio will become its trailing P/E ratio. At that time, Nvidia would be a pretty cheaply valued stock, especially considering that the primary market that drives Nvidia's sales is expected to increase by 150% over the next four years. This makes Nvidia an excellent stock to buy now, especially before it reports Q1 fiscal-year 2026 earnings at the end of May. Taiwan Semiconductor also expects monster growth from AI-related chips. Due to high demand, these chip orders are often placed years in advance, so when TSMC's management team speaks about incredible chip demand, investors should listen up. Over the next five years, Taiwan Semiconductor's management expects AI-related chip revenue to grow at a 45% compounded annual growth rate (CAGR). Overall revenue growth is expected to approach 20% during that same time frame, which is quite strong for a company of Tawian Semiconductor's size. One concern investors may have is the effects of tariffs on TSMC's business. However, management is already working on opening new fabrication facilities in the U.S. In addition to its initial $65 billion investment in opening a production facility in Arizona, Taiwan Semi will spend an additional $100 billion to establish three more production facilities, two packaging facilities, and one R&D center. That's a massive investment in U.S. domestic chip production, and it makes it an intriguing stock to buy. Additionally, TSMC's stock is cheap, trading for just 18.6 times forward earnings. Compared to the S&P 500, which trades at 22.5 times forward earnings, Taiwan Semi looks like a great bargain. If Taiwan Semiconductor is a great bargain, then Alphabet's stock is an absolute steal. Right now, Alphabet shares can be scooped up for an unbelievable 17.1 times forward earnings. That's quite cheap considering that Alphabet is one of the AI leaders with its Google family of products. While Alphabet may have been late to the game initially, it has caught up with a strong model and has hit a home run with its AI-powered search results summaries. However, there are fears that an economic concern could slow Alphabet's ad business (where it gets about 75% of its revenue). Furthermore, a district court judge found Alphabet guilty of operating an illegal monopoly in the ad market and search engine space. We're still a long way away from finding out what the resolution of this case will be, as it will undoubtedly end up in front of the Supreme Court. But that hasn't stopped investors from getting out of Alphabet's stock altogether. Alphabet is still an incredibly strong business (as evidenced by the U.S. government wanting to break it up), and with its cheap stock price, I think right now is an excellent time to buy some shares.