Nvidia's AI Dominance Faces Challenges Amid Market Volatility and Rising Competition

5 Reasons Why Nvidia Is Still in a League of Its Own | The Motley Fool

Last week was a roller coaster ride for Nvidia (NVDA -5.74%). The stock popped before reporting earnings on Feb. 26, fell 8.5% the following session, and then recovered nearly half of that loss on Friday. Once the dust had settled, the stock was down just 1.4% over the three-day period -- a sign that investors were somewhat neutral on Nvidia's latest print, guidance, and management commentary on the earnings call. Wall Street can get enamored by quarterly results and overemphasize slight changes in key metrics. A better approach is to view quarterly results within the context of the overarching investment thesis. Here are five reasons why Nvidia remains at the top of its game and is a growth stock worth buying now. Nvidia's exponential growth in recent years wouldn't have been possible without a surge in spending on graphics processing units (GPUs) from a handful of customers. In its fiscal 2025 (ended Jan. 26, 2025) 10-K annual report, Nvidia said: "Sales to direct Customers A, B, and C represented 12%, 11%, and 11% of total revenue, respectively, for fiscal year 2025, all of which were primarily due to the Compute & Networking segment." These unnamed companies are most likely hyperscalers, such as Amazon, Microsoft, Alphabet, and Meta Platforms -- all of which are well-known Nvidia customers and are ramping capital expenditures (capex). In their current fiscal years, Meta is guiding for $65 billion in 2025 capex, Alphabet is forecasting $75 billion, Microsoft plans around $80 billion, and Amazon expects around $100 billion. Meta is building out AI infrastructure to support its generative AI products, improve app engagement, and make Instagram a top platform for advertisers. Meanwhile, Amazon Web Services, Microsoft Azure, and Google Cloud are using compute power from Nvidia chips to expand their large-scale data centers. While Nvidia's dependence on just a handful of companies can be viewed as a risk, it is also an advantage because they are reliable buyers with deep pockets. These companies have the resources to invest even during cyclical slowdowns, whereas smaller players may not be as flexible. One of the biggest threats to Nvidia's business model is competition. Formidable competition could eat away at Nvidia's top-line growth and cut into margins. But so far, that hasn't happened. Advanced Micro Devices continues to forecast exponential growth in its data center GPU business, especially if it can take market share from Nvidia by delivering high compute power at a lower price point. But so far, AMD simply isn't delivering results, and its stock price reflects investor disappointment. AMD is hovering around a 52-week low, down over 55% from its all-time high from March of last year. In comparison, Broadcom is experiencing exponential growth in AI, especially in application-specific integrated circuits (ASICs). ASICs are custom-engineered for specific tasks and can be less expensive than GPUs. But Broadcom isn't as much of a pure-play AI name as Nvidia. Rather, it is a diversified networking company with a fast-growing AI segment. Meanwhile, Intel has failed to make a splash in the GPU market. Nvidia's ability to capture a larger percentage of AI spending is a testament to its elite product portfolio and continued innovation. Blackwell -- Nvidia's latest chip, designed for AI and data centers -- delivered $11 billion in revenue in the latest quarter, the fastest product ramp in company history. Instead of sitting back and enjoying its success, Nvidia continues to push the boundaries of new product development. That's a great sign that it can maintain its dominance, even if there's a cyclical slowdown. One reason Nvidia may have sold off the day after reporting earnings was a knee-jerk reaction to lower gross margins. For the latest quarter, fourth-quarter fiscal 2025, Nvidia reported 73% gross margins. That's down three percentage points compared to the same quarter in fiscal 2024. But for the full year, gross margins were 75%, compared to 72.7% in fiscal 2024. However, Nvidia is guiding for just 70.6% gross margins in the first quarter of fiscal 2026. The lower margins have nothing to do with any fractures in the business. As Nvidia CFO Colette Kress explained on the latest earnings call: During our Blackwell ramp, our gross margins will be in the low 70s. At this point, we are focusing on expediting our manufacturing to make sure that we can provide to customers as soon as possible. Once our Blackwell fully rounds, we can improve our cost and our gross margin. So, we expect to probably be in the mid-70s later this year. Margins have been an integral aspect of Nvidia's investment thesis. High margins allow the company to convert over 60% of sales into operating income, making Nvidia an immensely profitable business. As you can see in the chart, Nvidia has grown sales, operating margins, and diluted earnings per share exponentially over the last few years. NVDA Revenue (TTM) data by YCharts. This impressive growth is why Nvidia remains a good value despite its soaring stock price. Nvidia is, admittedly, a difficult stock to value. The stock is a bargain if it maintains its growth, even at a lower rate. But if spending fizzles out due to competition, a cyclical slowdown, or AI models needing less computing power, then Nvidia could be overvalued. Still, some of that uncertainty is arguably already priced into Nvidia's valuation. Nvidia sports a 27.8 forward price-to-earnings (P/E) ratio -- lower than Amazon, Apple, Broadcom, and Microsoft. AMZN PE Ratio (Forward) data by YCharts. Chip companies like Taiwan Semiconductor Manufacturing and AMD are cheaper than Nvidia on a forward earnings basis. But no mega-cap tech company or chip company has Nvidia's combination of industry dominance, revenue growth, and margins. Nvidia finished fiscal 2025 with $8.6 billion in cash and cash equivalents, $34.6 billion in marketable securities, and just $8.5 billion in long-term debt. Nvidia's interest income jumped from $866 million in fiscal 2024 to $1.8 billion in fiscal 2025 as it earned more interest on its assets. So not only does the company have a net cash position, it's also making interest income instead of paying out cash in interest expenses. Meanwhile, high interest rates adversely affect companies whose capital structure is dependent on debt. Nvidia's rock-solid balance sheet is particularly impressive, considering the timing of its product ramp-up. Nvidia isn't taking on debt to develop products in the hopes they pay off. Rather, it makes so much cash flow on its existing high-margin products that it can afford to ramp up new innovations like Blackwell with cash generated from the business, rather than debt. This is a massive advantage for Nvidia over the competition, especially if there's a cyclical downturn, because Nvidia can continue pushing the bounds of science and technology. Companies with poorer financial health couldn't do so. Nvidia continues to be a no-brainer buy for investors confident in sustained long-term AI spending. Even if sales growth and margins fall gradually over time, Nvidia could still be a great value because the stock isn't expensive. Investors with at least a three- to five-year investment time horizon should take a closer look at Nvidia. However, it's worth keeping in mind that the stock price could continue to be highly volatile, so risk tolerance and patience are paramount.

Nvidia Is Down 27% From Its Peak. History Says This Is What Happens Next. | The Motley Fool

Nvidia (NVDA -5.74%) has been the unquestionable leader of the artificial intelligence (AI) boom of the past two-plus years with the stock up more than 600% since the start of 2023 and its market cap now hovering around $3 trillion. However, lately, Nvidia stock has looked surprisingly mortal. Share prices of the AI chip leader trade down about 16% year to date, and the stock fell 8% last Thursday following its earnings report even as it beat estimates and offered solid guidance. The company reported 78% revenue growth in the fourth quarter to $39.3 billion, which topped the consensus at $38.2 billion, and adjusted earnings per share (EPS) improved from $0.49 to $0.89, ahead of estimates at $0.85. Finally, its Q1 guidance called for revenue of around $43 billion, better than analyst expectations of $42.05 billion. The sell-off may indicate some investor fatigue with Nvidia, and the stock continued to slide in the ensuing days as it got caught up in the concerns about President Donald Trump's new round of tariffs as well as concerns that some of its chips may have been illegally exported to China. The stock now trades down 27% from its peak just a few months ago and at its lowest point since September 2024. For investors, the stock's retreat presents a dilemma. Many are sitting on large gains from Nvidia stock and might be wondering if selling makes the most sense as the company's momentum seems to be slowing and the macroeconomic outlook is getting cloudier. Let's look back at the stock's recent history to see if it can inform where the stock will go from here. The semiconductor sector tends to be cyclical and volatile, and Nvidia's rise to become one of the most valuable companies in the world hasn't come smoothly. The chart below shows how far Nvidia has fallen from its peak since the AI boom began in 2023. Looking at the data, there has been only one other occasion in the last two years where Nvidia pulled back as far as it has now. That sell-off began in July 2024 on broader fears about AI infrastructure investment slowing over concerns that big cloud computing companies like Microsoft and Alphabet were overspending on new data centers and Nvidia chips without seeing meaningful returns to justify the expense. The sell-off also seemed to call into question valuations in the AI sector. While Nvidia did experience a double dip during that cycle, it was back to trading at all-time highs by October 2024, just a few months after it started. If we zoom out and take a longer view, we see a similar pattern. As you can see, twice in the last decade Nvidia stock has experienced drawdowns of 50% or more. The first came in 2018 after a yearslong surge in the stock as concerns about rising interest rates, tensions with China, a bubble burst in cryptocurrency mining, and a slowing global economy (including slowing demand for semiconductors), pressured the stock. Nvidia's revenue over much of 2019 fell, just as investors anticipated. However, the stock was back at all-time highs within roughly a year and a half from the start of that drawdown, more than doubling off of its bottom. Similarly, the stock plunged in 2022 along with the broader crash in tech stocks as its revenue from cryptocurrency-related demand dried up, driving its overall revenue down again. However, excitement around AI helped lift the stock back to all-time highs in about a year and a half again. It's impossible to say how long the current drawdown in Nvidia stock will last or how far the stock will fall. However, what we do know about Nvidia is that demand for its new Blackwell chips continues to outstrip supply. The company's competitive advantage in the data center graphics processing units (GPUs) that make up the backbone of AI applications only seems to be getting stronger, and the cloud computing giants are all increasing spending on capital expenditures (capex) this year. Additionally, the race toward artificial general intelligence (AGI) is expected to continue even if the global economy weakens. For Nvidia, that's all good news. Meanwhile, the stock now looks about as cheap as it's been since the AI boom started as it's trading at a forward price-to-earnings (P/S) ratio of just 25, in line with the S&P 500, even as the company is growing much faster than the broad market index. Nvidia will never be a low-risk stock, but the stock is likely to recoup its recent losses at some point. It's bounced back from steeper drawdowns in the past, and its technological advantages and positioning in the industry make it poised to deliver continued growth. Trading at a discount, the stock looks like a great buy right now.

Could Nvidia's Stock Soar by 90%? This Wall Street Analyst Thinks So. | The Motley Fool

Nvidia (NVDA -5.74%) stock has been rather weak lately, as it has been the focus of a marketwide sell-off that particularly hurt any company with significant exposure to the artificial intelligence (AI) arms race. Nvidia is down over 20% from its all-time high, placing it in bear market territory. However, the average price target on Nvidia's stock remains far higher than its current price. According to TipRanks, the average price target on Nvidia's stock among 42 analysts is $178.18, indicating a 54% upside. However, Rosenblatt analyst Hans Mosesmann has the highest price target, $220, indicating a 90% upside from current levels. That would be a massive one-year move, but is it feasible? Let's take a look. Nvidia's graphics processing units (GPUs) are powering the AI revolution. GPUs have an advantage over traditional CPUs because they can process multiple calculations in parallel. Furthermore, they can be combined in clusters to amplify that effect. This advantage, combined with Nvidia's best-in-class GPUs and infrastructure to support them, allowed the company to seize control over a very important sector. This success translated into strong growth for Nvidia, which saw revenue and profits skyrocket since the AI arms race kicked off in 2023. However, Nvidia isn't done growing yet. Many of Nvidia's largest clients (the tech giants that are purchasing truckloads of GPUs to power AI workloads) indicated that they are ramping up their AI spending in 2025. This is fantastic news for Nvidia, and the strong growth is likely to persist throughout 2025. For Q1, management expects revenue of $43 billion, indicating 65% growth. While management didn't give FY 2026 guidance, Wall Street expects revenue of $204 billion, indicating 56% growth. That's monster growth, and it's occurring at a level that nobody has seen for a company of Nvidia's size. This all plays into Mosesmann's $220 price target on Nvidia's stock, but is this projection realistic? To understand what a $220 stock price would indicate, let's examine historical valuation levels. Since 2024, Nvidia has traded for around 61 times trailing earnings, which is understandable for a company that's growing its revenue rapidly. However, with its 39.5 times trailing earnings price tag, the stock trades at a discount right now. If the stock reached $220 per share and returned to a 60 times trailing earnings valuation level (I'm not saying that valuation is justified), it would require earnings per share (EPS) of $3.67. Over the past 12 months, Nvidia generated $2.97 in EPS, so that would only require 24% EPS growth to hit that mark. Considering that Nvidia's revenue is expected to grow by 56% this year and that the average Wall Street analyst projects Nvidia will generate $4.50 in EPS this year, the $220 price tag seems feasible. However, the 60 times earnings valuation isn't sustainable. But a 40 times earnings valuation (Nvidia's current level) is, especially when you factor in the company's growth. For Nvidia to achieve a $220 stock price with a 40 times earnings price tag, it would require EPS of $5.50. That's a significant amount higher than the $4.50 expected, but the same analysts expect EPS of $5.72 in FY 2027. So, will Nvidia's stock reach $220 over the next year? I'd say it will be tough, but it wouldn't surprise me. On the other hand, if you stretch your time horizon to two years, I think hitting $220 per share is easily attainable. This would result in a 90% return over two years, which is outstanding. With the stock price down rather significantly from its highs, I think right now represents an excellent opportunity to scoop up shares of one of the market's biggest winners, which still has plenty of room to run.

3 Reasons Why I'm Buying Nvidia's Stock Like There's No Tomorrow | The Motley Fool

Nvidia (NVDA 1.24%) has been the artificial intelligence (AI) stock to own since 2023. Its performance over this time frame has been incredible, and its latest results were no exception. However, Wall Street seems to be getting bored with the stock. Similar to how a sports franchise may be loved at the start of a dynasty run, then hated by the end of it, Nvidia seems not to capture the attention of the market anymore. It reported fantastic fourth-quarter results for its fiscal 2025 year (ended Jan. 26), and yet the stock sold off. So is this an excellent time to load up on the stock? I've got three reasons why investors should be bullish on Nvidia's stock, not bearish. Nvidia's graphics processing units (GPUs) have powered the AI revolution because they can compete in parallel. This makes them perfectly suited to take on complex computing tasks like training AI models. Most of the AI training that we've seen to date has occurred on Nvidia's Hopper architecture, but that's being replaced by its latest design: Blackwell. Blackwell GPUs provide significant performance boosts over the previous Hopper design, including four times faster AI training. Furthermore, AI inference (which is when an AI model is given an input and a user expects an output) is 20 times cheaper than the Hopper 100 (H100) GPU. Blackwell GPUs will unlock a new phase of AI innovation that we haven't experienced yet, and this will continue to be a boost for Nvidia throughout the year. Although Blackwell chips made up $11 billion of Nvidia's $35.6 billion in data center revenue, they're still ramping up production on this game-changing product. However, this ramp-up also caused the one negative thing Wall Street focused on during Q4: falling gross margins. Nvidia's management was aware of this, as its gross margins fell from the mid-to high-70% range to 73% in Q4. This pattern should persist through Q1 but recover by the year's end as they become more efficient in producing Blackwell GPUs. The big item here is to know that these margins will recover, and Nvidia is putting the customer first by getting out as many of its innovative Blackwell chips as possible. This ramp-up will continue to cause Nvidia's revenue to rise, and investors should be very bullish about that, even if its gross margins take a short-term dip. There has never been a company of Nvidia's size that has sustained growth rates as strong as it has during its recent run. In Q4, revenue was up 78% year over year and up 12% over Q3. For Q1, management expects $43 billion in revenue, indicating 65% year over year growth and 9% quarter over quarter growth. However, Nvidia's management has a track record of under-guiding and overdelivering, so the real figures may be a few percentage points higher. That's stunning growth for a company of Nvidia's size, and Wall Street expects that growth to persist throughout this year and next. For the current fiscal year and next year, Wall Street analysts expect 57% revenue growth and 22% growth, far exceeding what many of Nvidia's big tech peers are putting up. There is still plenty of growth left in the AI space and other industries that Nvidia supports. The growth is far from over for Nvidia, and it's another bullish reason to purchase the stock. Nvidia shares have sometimes looked rather expensive throughout their run-up over the past few years, but I'd say they're starting to look rather cheap. Nvidia now trades for about 43 times trailing earnings and 28 times forward earnings and is posting phenomenal growth figures. Let's contrast that with other common big tech companies (like some of the Magnificent Seven). While Nvidia is still the most expensive by its trailing P/E ratio, it's not by much. When forward earnings are considered, Nvidia is the cheapest of these other big tech companies. So, why would you buy any of these other three when you can buy the company with the most to benefit from the most important innovation since the Internet? That's exactly why Nvidia is a screaming buy right now, and investors should be loading up on the stock after the weakness from its latest earnings report.

Bold Prediction: 1 Stock That Could Be Worth More Than Nvidia 7 Years From Now | The Motley Fool

Nvidia (NVDA 1.92%) has been one of the best long-term investments of all time. Since 1999, shares have increased in value by more than 285,000%, pushing the company's market capitalization into the trillions of dollars. The cause of Nvidia's soaring valuation has been the rise of artificial intelligence (AI). But Nvidia isn't the only company exposed to the massive tailwind that is AI spending. Long term, there's another chipmaker that could end up giving Nvidia a run for its money. And unlike Nvidia's stock, this relatively small competitor isn't priced for perfection, meaning patient investors could benefit from both rapid long-term growth rates and a discounted valuation. Nearly everyone is well aware of the leap in AI innovation that has occurred in recent years. The ChatGPT website receives several billion visitors every month, and the company's COO recently revealed that it has more than 400 million active monthly users, up from around 300 million just a few months ago. Amazingly, this growth occurred even as ChatGPT faced heavy competition from other AI models like DeepSeek, which itself has gained hundreds of millions of new users. But all of this growth is still on the end-user side. Right now, there's also a huge uptake in AI adoption among businesses, although adoption rates overall for businesses in the U.S. remain under 10%. That provides a huge runway for long-term growth. And just like in the internet's early days, the ultimate power and pervasiveness of this paradigm-shifting technology will likely be hard to overestimate. Consider the latest research from global consultancy McKinsey & Co. Generative AI alone, the firm believes, could produce $2.6 trillion to $4.4 trillion in economic impact from business adoption alone. By 2040, it believes revenue from AI software and services will reach $1.5 to $4.6 trillion, up from just $85 billion in 2022. Put simply, the pace and scale of the AI revolution will likely be even greater than most predict. That's great news for Nvidia. Its graphics processing units (GPUs) -- critical components that make it possible for AI services and applications to exist -- are considered the best in the business, granting the company a market share somewhere between 70% and 95% for AI GPUs. But as previous chip wars have demonstrated, market shares vary over long stretches of time, and Nvidia's dominant position may not last forever. But even if it does, there should be plenty of market to sell into. All that gives the company below a bright future despite a dramatically smaller market cap versus Nvidia today. It will be a very difficult feat, but if I had to pick one company to match Nvidia's size within a decade from now it would be Advanced Micro Devices (NASDAQ: AMD). The company is at a steep disadvantage right now in terms of technological capabilities and vendor lock-in. But it is making all the right investments to compete over the long term. Right now, AMD's market value is a small fraction of Nvidia's. And its valuation, at least in terms of multiples like the price-to-sales ratio, is considerably smaller as well. But the company has managed to continue upping its research and development budget despite these headwinds. That budget is around 25% of its revenue base right now. Nvidia's, while larger on an absolute basis, totals just 10% of its sales base. AMD's continued investments are allowing it to launch next-gen graphics cards for gaming like its Radeon RX 9000 series cards. But its also allowing it to slowly catch up with Nvidia for AI GPUs. The launch of its MI325X chips will allow it to compete more directly with Nvidia's Blackwell chips, and management recently noted that it will be accelerating its product schedule to release new chips on an annual schedule to better compete and capitalize on the boom in demand for AI chips. Will AMD overtake Nvidia over the next seven years? Nvidia's own explosive rise has shown that it's possible. But it will be a long, difficult road. Fortunately, the company continues to reinvest in new products, efforts that should be rewarded long term given continually rising end-market demand. At a fraction of Nvidia's valuation, AMD is a great speculative bet for patient growth investors.

Could Nvidia Stock Help You Retire a Millionaire? | The Motley Fool

Everyone wants to retire a millionaire. But many will never realize that vision. How do you make sure this future happens to you? Find great companies to invest in for decades at a time. Right now, the artificial intelligence (AI) revolution is creating some of the biggest growth opportunities in history. Could Nvidia (NVDA 1.92%) stock be your secret to a wealthy retirement? You might be surprised by the answer. Over the past few years, Nvidia's revenues have exploded higher, and not from a small base, either. In 2023, the company was bringing in less than $40 billion in sales. Today, annual sales have exceeded $130 billion, with the end of this growth trajectory nowhere in sight. That's because, in many ways, the AI revolution has just begun. And that's great news for Nvidia, considering its GPUs -- critical components for training and running AI models -- are widely considered best in class right now. According to global consultancy McKinsey & Co., investments into new AI software and services has gone gangbusters in recent years. "Equity investments in generative AI jumped from $5 billion in 2022 to $36 billion in 2023," one of the firm's recent reports revealed. The numbers for 2024 are likely significantly higher. The firm's low estimate has AI Software and Services revenue growing from $85 billion in 2022 to $1.5 trillion in 2040. Its high estimate sees industry revenue surpassing to $4.6 trillion by 2040. In other words, the pace of revenue growth for the AI sector from here on out is expected to be like nothing we've ever seen before. I've written before about how Nvidia's CUDA developer suite has created a vendor lock-in effect that could help it sustain dominant market shares for AI GPUs for years, if not decades, to come. All of this put together means that Nvidia will be selling into a rapidly growing, truly gigantic market with an industry-leading product that developers need for their innovation to become reality. It really is an incredible position to be in -- a major reason why Nvidia's valuation has soared into the trillions of dollars. To be fair, Nvidia stock is quite expensive on paper. It's surprising to see a trillion-dollar business garner a price-to-sales ratio of 21.6. That's typically been considered a lofty multiple, even for significantly smaller companies. This begs the question: Is Nvidia stock still a buy today? You may be surprised by the answer. Over the short term, anything is possible with Nvidia stock. High multiple market darlings like this are prone to erratic shifts in market sentiment. In early 2025, we experienced such a swing, with hundreds of billions of dollars wiped off Nvidia's valuation over a matter of days, with Chinese start-up DeepSeek announcing a chatbot created with cheaper chips. But here's the thing: Retiring rich doesn't typically happen overnight. It also doesn't happen by finding a single worthy investment. Retirement investing is a long game, where you stack the magic of compound interest in your favor. That is, you must fill your portfolio with companies that can grow your money consistently over time. That requires long holding periods and a level of patience few possess. Nvidia stock is undoubtedly expensive. But long stretches of growth can make almost any multiple look attractive in hindsight. The company has a durable competitive advantage due to vendor lock-in, and its end market growth will be incredible to watch, even at the low end of estimates. Those looking to retire rich should consider adding Nvidia shares to their portfolio today. But don't forget that it will be time, and likely a well-balanced portfolio, that will lead to the best results come retirement.

Should You Buy Nvidia Now -- or Wait Until March 18? | The Motley Fool

Nvidia (NVDA 3.97%) has proven itself to be a solid long-term investment, with its stock soaring 1,800% over the past five years. This is thanks to the company's dominance in one of today's highest-growth areas: artificial intelligence (AI). From about $200 billion right now, this market is forecast to reach beyond $1 trillion by the end of the decade. And Nvidia, due to its leadership, already is reaping the rewards. The company has reported quarter after quarter of double- and triple-digit earnings growth, and in the most recent period, the momentum continued. Nvidia delivered quarterly and full-year revenue increases to record levels -- $39 billion in the quarter and $130 billion for the year. In even better news, an enormous amount of growth may be ahead as the company is set to benefit from the ongoing AI infrastructure buildout as well as the next phases of AI growth -- such as the extended application of the technology to real-world problems. So, you probably won't be surprised when I say Nvidia is a fantastic stock to own. But when exactly should you get in on this player? You could make the move right away, or you could wait until March 18, a day that may represent a big catalyst for the stock. First, let's take a look at why Nvidia could make a great addition to your portfolio. Nvidia has established a solid earnings track record, and this growth should continue thanks to the company's leadership and innovation in AI. Nvidia makes the world's fastest AI chips -- known as graphics processing units (GPUs) -- and sells a wide selection of other related products and services. Basically, new or seasoned AI customers can find just about everything they need at Nvidia. Innovation is a particularly important point because it's the element that may keep Nvidia ahead of rivals in this fast-paced market. In Nvidia's recent earnings call, it spoke about the successful rollout of its new Blackwell architecture -- a product that brought in $11 billion in its first full quarter on the market. And Nvidia said it's on track to keep its promise of innovation on an annual basis, with Blackwell Ultra set for launch in the second half of the year, and then the Rubin architecture to follow. All of this means Nvidia is well positioned to benefit from the ongoing AI infrastructure buildout and the next stages of AI growth. And this makes the stock a no-brainer buy for any investor aiming to bet on the AI revolution. But some investors might be thinking it's wise to wait a couple of weeks. On March 18, we may learn even more about Nvidia's role in the development of AI as CEO Jensen Huang will be delivering the keynote at the company's annual GTC AI conference. "Come to GTC, and I'll talk to you about Blackwell Ultra, Vera Rubin and then show you what we place after that," Huang said during Nvidia's earnings call this week, suggesting the event may bring exciting details about what's next for the company. GTC will unfold over five days and feature exhibits, panels, and even a quantum computing day -- a first for the event. Huang's keynote address is scheduled from 10 a.m. to noon PT on March 18. Recent history shows us that Nvidia's stock hasn't necessarily soared in the weeks following its earnings reports -- even though these reports have been strong. For example, in the month following the last two earnings reports, the stock declined. If Nvidia stagnates or falls over the coming days, you may buy the stock at a lower price just ahead of GTC or as it kicks off than if you rush to get in on it now. Of course, history isn't always right, and that means Nvidia also could soar in the coming days, meaning you could end up paying more for the stock if you wait. So, what's the best decision? It's important to take the pressure off yourself and remember that short-term performance won't impact your overall performance if you hold onto a stock for the long term. Earlier, I mentioned Nvidia's quadruple-digit gain over the past five years -- an increase or decrease over any given few weeks during that time wouldn't have changed an investor's returns at the end of the period by very much. All of this means it doesn't really matter whether you buy shares of Nvidia today, right before Huang's keynote on March 18, or even after the conference. Over the long term, you're likely to see the same result, and in this case, that result could be very positive. That said, Nvidia looks particularly cheap as I write this, trading at about 29 times forward earnings estimates, so if you have the cash available to invest, now is a great moment to get in on this top AI stock.

Should You Buy Nvidia Stock After Its Blowout Q4 Results? | The Motley Fool

Investors no longer have to speculate about how Nvidia (NVDA 3.97%) performed in the fourth quarter of 2024. Now we know. And the news was once again positive. Nvidia reported its Q4 results after the market closed on Wednesday. It should come as no shock that the GPU maker handily beat Wall Street estimates. But should you buy Nvidia stock after its blowout Q4 results? Nvidia reported Q4 revenue of $39.33 billion, up 78% year over year and 12% higher than revenue generated in the previous quarter. This result topped the company's previous guidance of $37.5 billion. It also exceeded the average estimate of $38.05 billion among analysts surveyed by LSEG. The company posted Q4 adjusted earnings of $0.89 per share, a year-over-year increase of 71% and a 10% jump from the third quarter of 2024. The consensus analysts' estimate was for adjusted earnings of $0.84 per share. Nvidia's big story was its data center business. Data center revenue soared 93% year over year and 16% sequentially to a record $35.6 billion. This made up nearly 91% of the company's total revenue. There were a couple of clouds in Nvidia's silver linings, though. One negative with the Q4 results is that the company's growth is slowing somewhat. Nvidia's revenue skyrocketed 94% year over year in Q3 and 122% in Q2. The company's gross margins also slipped 3% year over year in Q4 to 73%. With all of this good news, why did Nvidia's share price slide a little after its Q4 update? Investors focus more on the future than on the past. Nvidia's outlook, while positive, wasn't overly impressive. The company's guidance was for revenue in the first quarter of its fiscal 2026 of $43 billion, plus or minus 2%. This figure is below the average estimate of $43.37 billion among the analysts surveyed by LSEG. It also reflects further deterioration in Nvidia's growth rate. Nvidia projects an adjusted gross margin in Q1 of 71%, plus or minus 50 basis points. This continues the downward trend of the company's gross margin in recent quarters. Investors would normally be ecstatic about a company delivering 65% revenue growth and gross margins of over 70%. However, when a stock trades at almost 31 times forward earnings as Nvidia does, expectations are understandably higher than for many other companies. I don't think too much fuss should be made about Nvidia's slowing growth and lower margins. No one should expect the company's growth rate to remain at the dizzying levels seen after generative AI first took off. Nvidia's margins should bounce back into the mid-70s once its launch of the new Blackwell chips is at full speed. Nvidia CEO Jensen Huang noted in the Q4 earnings call that the amount of computing power required for AI inference is already 100 times greater than needed for early large language models (LLMs). He added, "This is just the beginning." Huang thinks future AI models could need computing power that's thousands of times and perhaps even millions of times more than today's models. I suspect Huang will be proven right. I also expect Nvidia will remain at the forefront of the AI chip market. If these assumptions are correct, growth investors should buy Nvidia stock now. The company could have plenty of blowout quarters ahead.

Nvidia's Earnings Roared Higher to Record Levels. So, Why Isn't the Stock Soaring? | The Motley Fool

Nvidia (NVDA 3.97%) investors have grown used to positive surprises. The top artificial intelligence (AI) chip designer has surpassed analysts' earnings estimates and delivered double- or triple-digit growth quarter after quarter in recent times. This is thanks to Nvidia's strength in this booming chip market and the company's move to go all-in on AI, offering customers a full selection of related products and services. And this tech powerhouse didn't disappoint in its fourth-quarter and fiscal 2025 full-year report last week, reporting better-than-expected revenue and net income that surged to record levels. On top of this, Blackwell -- Nvidia's new game-changing architecture -- blasted onto the scene in the company's fastest product ramp ever. Nvidia offered various details about its market position and what's ahead for AI, signaling that growth is far from over. After this kind of report, you might expect Nvidia's stock to surge. But in fact, it didn't. The stock slipped more than 9% on Thursday in the trading session following the report, then went on to advance a little less than 4% on Friday. So, after such a positive earnings report, why isn't the stock taking off? Let's find out. First, a summary of the Nvidia story so far. As mentioned, the company is the leader in the AI chip market, with its graphics processing units (GPUs) being the most sought-after for critical tasks such as training and inferencing large language models (LLMs). This has resulted in ongoing high demand for its chips and other products, helping quarterly revenue soar beyond a full year of revenue as recently as two years ago. Nvidia is an early player in the space, so it has a first-to-market advantage. However, it's the company's commitment to innovation that has kept its leadership going. The tech giant pledges to update its GPUs annually, an enormous task that the company is executing well. Blackwell launched during the fourth quarter, generating $11 billion in revenue right out of the gate. CEO Jensen Huang says demand remains "extraordinary" as the world's biggest tech companies pile into this new customizable product. It offers them a selection of chips, networking options, and more. Nvidia said during its earnings call that large cloud service providers -- this brings to mind companies like Amazon or Microsoft, for example -- make up half its data center revenue. These are players with solid financials and big budgets, meaning they have what it takes to keep investing in premium chips and related products, a positive sign for Nvidia. The company aims to release Blackwell Ultra later this year, followed by the Rubin architecture. All this makes it hard for rivals to catch up and ensures Nvidia's leadership. On top of this, the company is ready to excel in the next stages of AI growth, such as the development of reasoning inference (the longer "thinking" process that can supercharge the performance of LLMs) and agentic AI (the application of the technology to real-world problems). Finally, set against the backdrop of a high-growth industry, with forecasts for today's $200 billion AI market to grow beyond $1 trillion, there's further support for the idea of Nvidia's long-term strength. In the recent quarter, Nvidia reported a 78% increase in revenue to a record $39 billion, and full-year revenue rose 114% to a record $130 billion. The company also predicted double-digit revenue growth for the first quarter, with expectations of $43 billion in revenue. Now, let's return to our question: Why isn't Nvidia's stock soaring after this strong quarterly performance and bright outlook? It's important to remember that the shares have climbed more than 1,700% over the past five years, so investors may choose times like this to lock in some profits. Nvidia stock hasn't advanced in a straight line in recent years and has dipped over certain periods, even though earnings and other news have been positive. In fact, earnings reports haven't necessarily led to immediate performance in the recent past: Nvidia stock actually fell in the month following the past two reports, though these reports were rock solid. So, what does this mean for investors? Nvidia has demonstrated strong earnings and stock price performance over time, and all clues right now are pointing to more of the same moving forward. This means that now, on the dip, with Nvidia trading for only 27 times forward earnings estimates, is a fantastic time to get in on the stock. If Nvidia's stock doesn't surge immediately after an earnings report, that's OK. What's important is the content of the report, and the latest ones show that the tech giant has what it takes to continue advancing over time.

Has Nvidia Stock Peaked at $153? One Telltale Metric Offers a Decisive Answer. | The Motley Fool

Investors haven't had to dig too deeply for the reasons behind this epic rally in equities. Everything from stock-split euphoria to the declining rate of inflation have helped lift the Dow Jones, S&P 500, and Nasdaq Composite to uncharted territory. But among these catalysts, none has been more directly responsible for lighting a fire under Wall Street than the rise of artificial intelligence (AI). In Sizing the Prize, the analysts at PwC pegged AI as having the potential to add $15.7 trillion to the global economy by the turn of the decade. The capacity for AI-driven software and systems to reason, act, and evolve, all without the need for human intervention, gives this technology utility in most industries around the world. Although dozens of tech stocks have witnessed their shares soar as a result of the AI revolution, no company has been a more direct beneficiary than Nvidia (NVDA 3.97%). Leading up to its latest round of operating results, Nvidia had packed on nearly $3 trillion in market cap since 2023 began, including hitting an all-time high of $153 per share on Jan. 7, 2025. But while Nvidia's headline growth figures continue to look phenomenal, one telltale metric suggests Nvidia's best days are in the rearview mirror. Market-leading businesses don't just add $3 trillion in market cap over the course of two years by accident. Nvidia's ascent is a reflection of its hardware being the clear top choice in high-performance data centers. Last year, the analysts at semiconductor analysis firm TechInsights estimated that Nvidia accounted for 98% of the graphics processing units (GPUs) shipped to enterprise data centers in 2022 and 2023. Considering that Nvidia recorded $130.5 billion in full-year sales in fiscal 2025 (ended Jan. 26, 2025), and data center revenue made up more than 88% of net sales, it's fair to assume that Nvidia's Hopper (H100) chip and successor Blackwell GPU architecture are in high demand. Then again, assumptions aren't necessary. According to Nvidia's fiscal fourth-quarter filing, it "delivered $11 billion of Blackwell architecture revenue." This is an incredibly quick ramp-up that demonstrates just how popular the company's hardware is with businesses wanting to be on the cutting-edge of AI innovation. Nvidia's CUDA software platform has played a key role in assisting growth, as well. CUDA is the toolkit leaned on by developers that helps them maximize the computing potential of their GPUs, along with build large language models. Most importantly, it's keeping Nvidia's customers loyal to the brand. But perhaps the prevailing reason Nvidia has seen its sales catapult from $27 billion to $130.5 billion in just two years is AI-GPU scarcity. When demand for a good or service overwhelms supply, it's normal for the price of said good or service to climb until demand tapers. Nvidia has been commanding up to $40,000 per Hopper chip and $30,000 to $40,000 for each Blackwell chip. This compares to Advanced Micro Devices selling its Instinct MI300X AI-accelerating chips for $10,000 to $15,000 per unit. Otherworldly pricing power has lifted Nvidia's sales and profits, as well as boosted its margins. If investors were to solely judge Nvidia stock based on its ability to leapfrog the consensus revenue and profit estimates of Wall Street analysts, there'd be no end in sight to its upside potential. But if these same investors were to dig beyond the headline figures, a different story would emerge. During the fiscal fourth quarter, Nvidia precisely met its forecast generally accepted accounting principles (GAAP) gross margin of 73%. Though the company's gross margin has increased substantially from where things stood before the AI revolution took shape, a worrisome gross margin trend has emerged that spells trouble for Nvidia stock. Here's a snapshot of Nvidia's GAAP gross margin since peaking during the fiscal first quarter of 2025: NVDA Gross Profit Margin (Quarterly) data by YCharts. The above chart doesn't yet reflect Nvidia's GAAP gross margin of 73% for the fiscal fourth quarter. This persistent decline in gross margin is indicative of competition picking up in a big way. The includes domestic competitors like AMD, as well as overseas tech giants, such as China-based Huawei. As AMD and Huawei increase their GPU output, the AI-GPU scarcity that's afforded Nvidia phenomenal pricing power will wane. But it's not just these direct competitors that are the problem. Many of Nvidia's top customers by net sales are internally developing AI chips to use in their data centers. This includes Microsoft, Meta Platforms, Amazon, and Alphabet. The Hopper and Blackwell GPUs maintaining their computing speed superiority likely won't be enough to save Nvidia from losing out on valuable data center space in future quarters to these less-costly and more readily available AI chips. There are also ongoing concerns regarding China-based DeepSeek and its large language model chatbot. DeepSeek's R1 model is touted as being developed for a fraction of the cost of what Wall Street's most-influential businesses are spending on their AI-data centers, and it utilizes less-powerful Nvidia chips. There's the worry that select businesses may shift their orders to less-costly (i.e., lower margin) hardware. The final dagger is that most businesses lack a well-defined game plan for how to optimize their AI solutions and/or generate a positive return on their AI investments. Investors overestimating the early stage adoption and utility of a next-big-thing technology is nothing new. Rather, it's the recipe that often leads to tech bubbles forming and bursting. Based on Nvidia's GAAP gross margin trend over the last year, it looks increasingly likely that its stock has peaked at $153 per share.

Nvidia just lost billions but some say it's a buying opportunity

Nvidia's stock price (NASDAQ: NVDA) has seen significant volatility, even though its Q4 earnings surpassed expectations with strong revenue and earnings per share. The equity has made a short-term recovery, reclaiming the $120 support zone, but technical indicators suggest a potential for a sustained correction. In February, Nvidia ended positively at $124.80, closing the last trading session up 3.87%. However, over the week, NVDA's share price declined nearly 9%, finishing February below the 200-day moving average (MA), a typically bearish signal. This is the second time NVDA has closed at this level since January 2023. Why Nvidia's earnings report could be the biggest market mover this week Trading analyst Patrick Karim warned on February 27 that Nvidia is nearing "implosion mode," pointing to the breakdown of its rising trend line. NVDA has dropped below its 12-day and 36-day moving averages, which are crucial for maintaining bullish momentum. The volume profile indicates weaker support below current levels, suggesting the stock price might correct and trade between $90 and $95. Nick Schmidt, co-founder of TraderLion, also expressed a bearish outlook on March 1, predicting an accelerated drop but noting it could present a buying opportunity post-correction. Nvidia's strong fundamentals are notable, especially its dominance in artificial intelligence (AI), with a Q4 revenue of $39.33 billion. This was primarily fueled by its AI data center business, which constitutes 91% of total sales. Data center revenue rose to $35.6 billion, marking a 93% year-over-year increase, driven by strong demand for its Hopper and next-gen Blackwell AI chips. Despite anticipated growth slowing, the Q1 2025 guidance suggests a 65% year-over-year growth rate, considerably down from last year's 262%. Nevertheless, the company maintains confidence in ongoing AI-driven demand. Nvidia has initiated a $33.7 billion share buyback program, bolstering its stock's bullish outlook. Investment strategist Shay Boloor remarked on March 1 that the stock is not peaking yet, highlighting that the Blackwell architecture is effectively enhancing AI reasoning capabilities and positioning Nvidia centrally in the compute revolution. CEO Jensen Huang anticipates a 100-fold demand for AI reasoning, positioning Nvidia well to meet these requirements with the Blackwell chips. On February 27, following the earnings report, Nvidia received seven new buy ratings from analysts, reinforcing confidence in its AI growth trajectory. Rosenblatt set a street-high price target of $220, implying a potential 77% upside from current levels. Firms such as Truist, Bank of America, and Cantor Fitzgerald have reiterated their buy ratings, with D.A. Davidson maintaining a hold at $135. Nvidia shares have remained stagnant for much of the past six months, reflecting only a 10% increase compared to an 8.2% gain for the Nasdaq. Investors have tempered expectations regarding the company's ability to sustain extraordinary revenue growth, despite its significant market position in the tech sector. CEO Huang has noted "incredible" demand for the Blackwell processors, with key customers poised to invest billions in AI infrastructure over the coming years. Nvidia anticipates Q1 sales to rise 61% year-over-year to $42 billion and earnings to increase nearly 55% to $27 billion. Analysts predict a fiscal year tally exceeding $200 billion, although ramping production of Blackwell chips may reduce profit margins before returning to mid-70% levels later in the year. US jobs report could shake markets: Here's what's at stake Concerns have surfaced among retail investors, with the American Association of Individual Investors reporting that 61% of those surveyed expressed a bearish outlook, the highest level in a year. Such sentiment arises amid fears of an economic slowdown due to potential tariffs, persistent inflation, and higher interest rates, coupled with a retreat in AI-related stocks. While Nvidia has not faced significant declines, its shares have shown little movement compared to their values six months ago. Options market data also indicate a cautious, if not bearish, outlook on Nvidia stock, with rising prices for put options reflecting expectations of notable near-term declines. Nvidia may experience longer-term challenges if spending plans from major customers like Microsoft, Amazon, Meta Platforms, and Google fail to yield expected returns. D.A. Davidson analyst Gil Luria noted that while Blackwell supply is predicted to ramp quickly, a decline in demand for Nvidia's compute capabilities may be unavoidable as customers reassess their returns on AI investments. Much of Nvidia's demand may be already factored into its share pricing, which has seen an increase of more than $2.1 trillion in market value since it initiated the AI investment wave in May 2023, significantly outperforming the S&P 500. Analyst Scott Acheychek asserted that while Nvidia's extraordinary gains may have been priced into the stock, the potential for future catalysts, such as advancements in AI infrastructure or regulatory changes in the semiconductor industry, remain a consideration for investors. Benchmark analyst Cody Acree also views the current sell-off as an opportunity for investors to establish a stake in Nvidia, described as a key player in the ongoing AI transformation in technology.

Nvidia Passes Its Latest Test. Here's What It Means for Investors. | The Motley Fool

All eyes were on Nvidia (NVDA 3.97%) once again when it reported fourth-quarter earnings last week. However, Nvidia's stock isn't in the same position as it was a year or two ago when it was delighting investors with skyrocketing growth and a seemingly endless opportunity in artificial intelligence (AI). The company is still delivering blistering growth, but investor expectations now seem to be aligned with the company's trajectory, and there is less room for surprises. Despite ample anticipation for the fourth-quarter report after hours on Wednesday, the stock was trading down 3% this past Thursday even as the company beat estimates. Nvidia didn't disappoint with its fourth-quarter results. Revenue jumped 78% from the quarter a year ago to $39.3 billion, which was ahead of the consensus at $38.2 billion. Growth was again paced by the data center segment, where AI computing is taking place, with data center revenue up 93% to $35.6 billion. The gross margin fell from 76% to 73%, reflecting increased spending on the production ramp-up for the new Blackwell platform. However, it gained leverage in operating expenses, and earnings per share jumped 82% to $0.89, ahead of the consensus at $0.85. Looking ahead to the first quarter, the company sees revenue of around $43 billion, representing 9% growth on a sequential basis and 65% year over year. Nvidia's earnings report, and the market's response, seemed to underscore that the surprise factor in its earnings report is now gone. While 78% revenue growth is phenomenal, investors have come to expect such growth from Nvidia as demand for its Blackwell components continues to outstrip supply. Now that expectations have adjusted to Nvidia's growth, and the massive opportunity in AI, it will be harder for Nvidia to deliver the kind of breakout performance we saw from the stock in 2023 and 2024. On the earnings call, CEO Jensen Huang seemed to quell lingering concerns that DeepSeek's low-cost AI model would sap the company's growth as investors had feared when the new model triggered a massive one-day sell-off in the AI sector a month ago. Despite the DeepSeek innovation, AI computing needs are only growing. Huang noted that post-training demands more computing that pre-training. He also explained that the company has good visibility into AI expansions and its own demand as it works closely with its customers. He noted the large number of AI start-ups that continue to come online as well. Despite the DeepSeek scare, Nvidia for now seems more likely to be range-bound in the coming months as the benefit of the massive AI infrastructure build-out is understood. At this point, it's unclear what could be the catalyst for Nvidia to take another leg up. The company might need to see a ramp-up in another area of AI such as autonomous vehicles or agentic AI, which would lift the stock. AI is still in its early stages as big tech companies race toward artificial general intelligence (AGI), and Nvidia seems likely to dominate AI computing infrastructure in the future as well. At one point, investors believed challengers like Intel and Advanced Micro Devices would take share in the GPU market, but Nvidia has fended them off with new advances in its Blackwell platform, and it's likely to maintain that leadership in data center GPUs down the road. Currently, the stock trades at a price-to-earnings ratio of 43, which looks like a great price for a company growing revenue by 78%, though that growth rate is set to steadily slow. Over the long term, Nvidia still looks like a must-own stock. It's leading the AI revolution. Huang has proven himself as a visionary, and the company is likely to benefit from future technologies that aren't yet seen. However, over the near term, investors should temper their expectations as Nvidia's current growth trajectory is well understood. For the AI chip leader, 2025 could be about digesting the gains of the last two years, rather than making new ones.

1 Mind-Boggling Number From Nvidia's Q4 Earnings That May Have You Thinking Twice About Whether the Stock Peaked | The Motley Fool

Chipmaker Nvidia (NVDA 1.13%) has been a growth beast over the past few years. The growth that the business has experienced due to artificial intelligence (AI) turned Nvidia into one of the most valuable companies in the world today, with a market cap of around $3 trillion. Investors may be growing concerned, however, that due to the stock's massive 1,600% gains over the past five years, it may have already peaked -- and it's too late to invest in the tech company today. But Nvidia's recent earnings report highlights just how strong the business has become today, and why there can still be significantly more upside ahead for the AI stock, even if you invest in it right now. A lot of the attention is on Nvidia's top-line growth, but what really impresses me is its bottom line. The company's strong margins ensured that as the business grows, a lot of that growth on the top line flows through to net income and boosts earnings. And that profit growth prevents the stock from being too expensive. The company reported its fourth-quarter earnings and its year-end numbers for the period ending Jan. 26, 2025. Not only did sales more than double to $130.5 billion for the full year, but the company's net income moved from $29.8 billion a year ago to $72.9 billion this past fiscal year. To put into perspective just how significant that number is, consider that over the previous 10 fiscal years, Nvidia's combined profit totaled around $61 billion. The staggering size of its business today underscores the financial strength Nvidia has moving forward. The business is in excellent shape to weather rising costs while also having plenty of financial resources at its disposal to pursue growth opportunities, including potentially acquiring other companies. And with more opportunities out there, it may not be hard to see why the chipmaker's valuation can still go higher, as it arguably isn't all that expensive given its dominance. Nvidia's stock has fallen by 15% since the start of the year. Whether investors are concerned about the economy, or a slowdown in AI-related spending, there's clearly some apprehension about Nvidia's stock lately. But when you factor in the company's rapid earnings growth and its falling share price, its valuation looks much more reasonable compared with where it was a year or two ago. Nvidia's stock is now trading well below the price-to-earnings (P/E) multiple it has averaged over the past three years. It's a good example of how a fast-growing business that's trading at a high P/E could end up looking a whole lot cheaper in the future, as its bottom line grows. There's growing risk in the markets these days due to tariffs and the potential for trade wars to weigh on businesses in all industries. And that could result in more of a decline for Nvidia and other growth stocks that need to generate high levels of growth in order to attract investors; any type of slowdown may impact their valuations. Nvidia's stock could continue to fall in value due to macroeconomic concerns, but with the business looking solid, it's an investment that may still have a lot of upside over the long haul. This can be an excellent stock to buy today, although investors should brace for the possibility of some greater volatility in the weeks and months ahead.

Nvidia's stock shows unseen trends in years - Is NVDA an attractive investment now? Here's what analysts are saying

Nvidia's stock has seen rare market moves, dropping sharply in recent weeks. Despite this, analysts believe NVDA stock remains an attractive investment. A Bernstein analyst highlights that key valuation metrics are at decade lows, making Nvidia shares appealing. While challenges like chip export restrictions and AI competition exist, Nvidia's dominance in AI technology keeps investors interested. As the company prepares for its AI conference, the question remains -- is now the time to invest in Nvidia? Analysts weigh in on the risks and opportunities for investors considering NVDA stock at its current valuation. Nvidia's stock has recently experienced a notable decline, dropping 8.7% on Monday and 15% since the start of the year. However, this downturn presents a unique investment opportunity, as several valuation metrics are approaching decade lows, making Nvidia's stock increasingly attractive. Bernstein analyst Stacy Rasgon highlights that Nvidia's stock is now trading at a slight premium to the S&P 500, its lowest since 2016, and below parity versus the PHLX Semiconductor Index, nearing decade lows. Additionally, the stock trades at 25 times forward earnings, the lowest multiple in a year. Historically, purchasing Nvidia at this valuation has proven profitable for investors. Nvidia has encountered several hurdles, including transition issues with its latest Blackwell chip and international restrictions. The company reported better-than-expected earnings; however, the stock has declined over 13% since its earnings report, closing at a six-month low on Monday. Market concerns include potential further export limits on chips to China, which could significantly impact Nvidia's revenue. Despite short-term challenges, analysts remain optimistic about Nvidia's long-term prospects, especially in the AI sector. The emergence of DeepSeek's cost-effective AI model initially worried investors about a potential decrease in demand for Nvidia's high-end chips. However, Nvidia's CEO Jensen Huang emphasized that the rising demand for AI inference and more sophisticated applications would actually increase the need for advanced computing power, positioning Nvidia for growth. Nvidia's stock is now trading at a price-to-earnings (P/E) ratio of 26 times forward earnings, making it more attractive relative to the average Nasdaq-listed company. Upcoming events like Nvidia's AI conference, GTC, could further drive positive sentiment. Given the current valuation metrics and the company's strong position in the AI market, analysts like Stacy Rasgon suggest that Nvidia's stock is increasingly attractive. However, potential investors should consider ongoing challenges, such as regulatory risks and market volatility, before making investment decisions. Is Nvidia stock a good investment after its recent decline? Nvidia's stock drop has lowered its valuation, making it attractive to some analysts, but risks remain. What factors are affecting Nvidia's stock price? Nvidia's stock is impacted by AI market trends, chip export restrictions, and investor sentiment on valuations.

What's Next for Nvidia? Jensen Huang Just Revealed 3 Reasons to Buy the Stock Hand Over Fist. | The Motley Fool

Nvidia (NVDA 3.97%) announced overwhelmingly positive fourth-quarter results last week. However, its shares sank the following day. Should investors be concerned? I don't think so. Sure, Nvidia's growth is slowing somewhat. The company's future remains bright, though. CEO Jensen Huang just revealed three growth drivers for Nvidia that, in my opinion, translate to reasons to buy the stock hand over fist. Huang said in Nvidia's Q4 earnings call, "This is now the beginning of the agentic AI era, and you hear a lot of people talking about it, and we['ve] got some really great things going on." He's right on all three counts, in my view. Agentic AI involves autonomous AI agents that can make decisions and perform tasks without constant human involvement. 2025 is shaping up to be the year of AI agents. Multiple leading technology companies are investing heavily in agentic AI, including Google parent Alphabet, Meta Platforms, Microsoft, and OpenAI. Nvidia is already in the thick of agentic AI development. CFO Colette Kress noted in the Q4 call that the company's consumer internet revenue roughly tripled year over year with agentic AI as one of the growth drivers. Huang hinted at major agentic AI advances on the way, saying that Nvidia will "have some really exciting things to share" at its GTC AI Conference scheduled to begin March 17, 2025. While there's a lot of buzz around agentic AI, you probably haven't heard as much about physical AI. However, Huang thinks it's another important part of the next wave of AI that is, in his words, "right around the corner." Physical AI involves the use of AI technology within physical systems. One good example of physical AI is in robots. Another is self-driving cars. Huang mentioned several other applications of physical AI in Nvidia's Q4 call, including tractors, lawnmowers, buildings, and warehouses. Nvidia is already a major player in the physical AI market. Kress noted that nearly every autonomous vehicle (AV) company is using Nvidia's infrastructure and software platforms "in the data center, the car, or both." She also highlighted Nvidia's recently announced Cosmos World Foundation Model platform. This platform enables developers to build physical AI systems. Kress mentioned Uber Technologies as one of the early adopters of Cosmos. Huang also pointed out that many start-up companies are working on physical AI. He said that "each one of them needs a fair amount of computing infrastructure." This, of course, presents a great opportunity for Nvidia as the leader in the GPU market. The third component of the next wave predicted by Huang is sovereign AI. What is sovereign AI? It refers to nations building AI systems that they can control using their own data and technology infrastructure. Huang didn't talk much about sovereign AI in Nvidia's Q4 call. However, he said that the technology, like agentic AI and physical AI, is "barely off the ground." He argued, though, that Nvidia is abreast of what's going on in sovereign AI because it's "in the center of much of this development." Is that merely hubris from a CEO acting as a cheerleader for his company? Nope. Nvidia truly is at the forefront of many sovereign AI initiatives. For example, French cloud services provider Scaleway is using Nvidia's technology to build Europe's most powerful cloud-based AI supercomputer. India's Tata Group is using the Nvidia GH200 Grace Hopper Superchip to develop a sovereign AI infrastructure. Japan is working with Nvidia to build sovereign AI systems that include public-private partnerships. And those are just a few of the sovereign AI initiatives Nvidia is involved in. Huang didn't directly say to buy Nvidia stock hand over fist because of the company's agentic AI, physical AI, and sovereign AI opportunities. However, I view all three growth drivers as great reasons to buy the stock right now. I fully agree with Huang that we're still in the early stages of these areas of AI. I also think Nvidia is in the strongest position of any company to profit from all three components of the next AI wave.

Nvidia Continues to See Unstoppable Growth, but Is the Stock Still a Buy? | The Motley Fool

A glance at its fiscal 2025 fourth-quarter report shows Nvidia (NVDA 3.97%) once again showed remarkable growth. The demand for its graphics processing units (GPUs) remains insatiable. The company's semiconductor chips have become the backbone of the artificial intelligence (AI) infrastructure build-out, which continues to show no signs of slowing down. Despite the strong report, the stock was unable to get a nice bounce and it trades down about 10.5% year to date. Still, the stock has been on a tremendous run the past five years, up an astounding 1,810% over the past five years, as of this writing. Let's take a closer look at Nvidia's results and see if the stock can regain its momentum. For the second consecutive year, Nvidia was able to more than double its revenue, which is an astonishing feat for a company its size. Revenue rose 114% to $130.5 billion in its fiscal 2025 (which ended Jan. 26) on top of 126% revenue growth the year before. For fiscal Q4, revenue soared 78% year over year to $39.3 billion, once again powered by AI demand. Its adjusted earnings per share (EPS) climbed 71% to $0.89. Adjusted EPS grew slower than revenue as its gross margin slipped 300 basis points to 73%. Nonetheless, the results surpassed analyst expectations for adjusted EPS of $0.84 on revenue of $38.1 billion. Its data center business once again led the way, with revenue surging 93% year over year to $35.6 billion. The company said the growth was led by its H200 Hopper chip, while its next-generation Blackwell GPU architecture exceeded expectations with revenue of about $11 billion. While Nvidia is known for its chips' superior performance in training AI models, it said its inference demand was accelerating, while noting that Blackwell was designed for reasoning AI inference. Much of Nvidia's revenue continues to come from large cloud computing providers, which made up about half of Nvidia's data center revenue in the quarter; however, it said regional cloud providers increased as a percentage of data center revenue. Meanwhile, its consumer internet revenue, which includes customers such as Meta Platforms and Elon Musk's xAI, tripled. Enterprise revenue doubled, with Nvidia saying that its platform is being adopted by organizations across industries. It said its solutions are being used for such things as autonomous driving, fraud detention, and drug discovery. Nvidia's other segments were mixed. Gaming revenue sank 11% to $2.5 billion, as Q4 shipments were impacted by supply constraints. Professional visualization revenue increased 10% to $511 million, while automotive and robotics revenue more than doubled to $570 million. The company continues to be a cash-flow machine, generating operating cash flow of $16.6 billion and free cash flow of $15.6 billion in the quarter. Nvidia ended the year with net cash and marketable securities of $43.2 billion and $8.5 billion in debt. It announced it will begin paying a modest $0.01 quarterly dividend next quarter. Nvidia projected fiscal Q1 revenue to be around $43 billion, which would represent growth of approximately 65% year over year. The growth will be led by its new Blackwell GPU architecture. However, it is looking for its gross margin to come in at 70.6%, down from 78.4% a year ago. It expects the gross margin to improve throughout the year as Blackwell scales and efficiencies are gained, reaching the mid-70% range. Meanwhile, the company is looking to launch its new Ultra GPU architecture in the second half of 2025. Nvidia's stock remains inexpensive given its growth, with a forward price-to-earnings (P/E) ratio of just over 28 times this year's analyst estimates and a price/earnings-to-growth (PEG) ratio of under 0.5. PEG ratios below 1 typically indicate a stock is undervalued. Meanwhile, Nvidia continues to be the biggest winner of AI infrastructure growth. Companies continue to pour money into AI infrastructure as evidenced by the announced capital expenditure (capex) budgets from the big three cloud computing companies (over $250 million combined) as well as Meta Platforms, which is looking to spend up to $65 billion in AI-related capex. In addition, a consortium of companies led by Japan's SoftBank and OpenAI are set to spend $500 billion on AI infrastructure in the next few years in the U.S. as part of Project Stargate. That's a lot of AI infrastructure spending that Nvidia is set to benefit from this year. That said, Nvidia doesn't have a recurring-revenue business model like a software company and the semiconductor business can be cyclical. Where AI infrastructure spending trends over the next five to 10 years will go a long way in determining whether the stock is a good long-term investment. Right now, though, Nvidia looks to be in a very good position for this year while trading at an attractive valuation, making it a buy at current levels.

Is Nvidia Stock a Buy Now? | The Motley Fool

Nvidia (NVDA 3.97%) reported financial results for its fiscal 2025 fourth quarter (ended Jan. 26), and the business exceeded Wall Street expectations. Revenue of $39.3 billion and adjusted earnings per share of $0.89 came in ahead of estimates. Nonetheless, shares were down on the morning following the announcement. Maybe the numbers still weren't as good as the market hoped, which isn't surprising given the amount of excitement surrounding Nvidia. The current 15% dip off the peak share price might draw attention from opportunistic investors. Is Nvidia a buy now? Let's take a closer look at the bull and bear cases for this top artificial intelligence (AI) stock before coming to a more informed decision. The most obvious bull argument for Nvidia is its unbelievable growth trajectory. Revenue jumped 114% higher in fiscal 2025. And in the past five years, that top-line figure is up a ridiculous 12-fold. The company's powerful graphics processing units (GPU) are seeing tremendous demand, particularly from cloud service providers. And management is optimistic about the potential for the new architecture, known for better reasoning and inference. "The demand for Blackwell is extraordinary," CEO Jensen Huang said on the Q4 2025 earnings call. Nvidia is in a favorable position as the picks-and-shovels infrastructure provider in the AI boom. Growth is impressive, but what's equally awe-inspiring is the bottom line. Nvidia is incredibly profitable. Its operating margin came in at 61% in the latest fiscal quarter. That's up from 39% just three years ago. There is clearly some scale advantage here, as expenses increase at a slower pace than sales. Owning companies that possess an economic moat is a smart move, as this key trait helps protect against competitive threats. Nvidia arguably benefits from intangible assets with the technical know-how that supports its ability to innovate and launch new products and services in the GPU market. What's more, customers likely have switching costs, particularly with the CUDA software. Once these customers install Nvidia GPUs and get onboarded with the computing platform and programming model, it becomes more of a headache to change providers. Investors can gain a thorough understanding about a stock's merits by looking at all sides -- including the bear case. I think there are a few main points to highlight here. The release of the DeepSeek-R1 from China shook the industry. The worry is that if AI models can be run much more cheaply -- as DeepSeek developers claim -- then why spend so much on Nvidia's expensive GPUs? One implication is that maybe revenue and profits will face mounting pressure. The majority of Nvidia's revenue comes from a handful of accounts. Intense customer concentration hasn't been an issue thus far, as these so-called hyperscalers have unlimited financial resources and an incentive not to get left behind in the AI race. But these businesses are developing their own chips to power AI capabilities, essentially aiming to move upstream in the value chain to bring things in-house as opposed to outsourcing. It's anyone's guess how long it takes for these customers to move away from Nvidia. But that risk is certainly something to keep in mind, and could limit Nvidia's long-term revenue potential. As of this writing, Nvidia shares trade at a forward P/E ratio of 28.1. Given the company's strong growth and profitability, this valuation might be reasonable for some investors. Wall Street consensus analyst estimates call for sales to skyrocket 111% over the next three fiscal years. This robust outlook could justify the valuation. There's a lot of uncertainty, though. The AI industry is changing so rapidly that no one knows how things are going to look even just 12 or 24 months from now. And because spending on AI-related investments in aggregate is becoming so massive, what happens in an economic downturn? There's a chance that Nvidia will see plummeting demand. This company's rise has been spectacular. However, I believe the bear case holds more weight, so I don't think the stock is a smart buy.

The Smartest Growth Stock to Buy With $500 Right Now | The Motley Fool

After it reported fourth quarter 2025 financial results this week, it's clear that Nvidia's growth is hardly tapering off as demand for its artificial intelligence (AI) chips remains incredibly strong. For investors, looking to carve out a niche of their portfolios with growth opportunities, Nvidia shines as an exceptional opportunity. Even investors with only a rudimentary understanding of the AI industry and its key players probably recognize that Nvidia stands at the forefront of the rapidly burgeoning industry. But how exactly is Nvidia benefiting from the AI boom? Unsurprisingly, it's related to data centers. Skyrocketing 93% compared to the same period last year, Nvidia's data center business provided fourth quarter 2025 sales of $35.6 billion, a high-water mark for the company. This, in turn, contributed to Nvidia reporting $115.2 billion in data center sales for fiscal 2025. For perspective, Nvidia reported overall revenue of $130.5 billion for fiscal 2025, so it's clear how prominently this business figures into the company's financials. According to Nvidia, the main driver of growth for its data centers business stems from enthusiasm for the Blackwell chip among large cloud service providers' located in the United States. On the Q4 2025 conference call, Nvidia acknowledged that "Countries across the globe are building their AI ecosystem as demand for compute infrastructure is surging." In other words, Nvidia's growth in this business hardly seems to be tapering. Investors would be shortsighted to conclude that it's only the company's data centers business where management sees a growth opportunity. Nvidia also achieved significant growth in its automotive and robotics business. Fiscal 2025 revenue for this business, $1.7 billion, soared 55% compared to fiscal 2024. Automakers are continually selecting Nvidia and its chips to advance vehicle's autonomous capabilities. In fact, Nvidia forecasts its automotive business alone to reach $5 billion in 2026 as manufacturers adopt Nvidia's DRIVE AGX platform and technologies. Beyond cars, Nvidia is recognizing strong demand from robotics companies. Hyundai Motor Group, for example, announced its intent to use Nvidia's solutions to advance robotics development and smart factory initiatives as well as autonomous vehicles. Rising 21% year over year to $1.9 billion in fiscal 2025, Nvidia's professional visualization business is also in growth mode. From 3D models to sophisticated visual effects, the company's various offerings represent powerful tools for various industries including architecture to manufacturing. Potential investors may fear that Nvidia stock comes with an exorbitant price tag, but the reality is that the stock is attractively valued right now. Trading at 44.3 times operating cash flow -- albeit still seemingly pricey -- shares of Nvidia are changing hands at a discount to their five-year average cash flow multiple of 55.4. Similarly, Nvidia stock is trading at 44.7 times trailing earnings, which seems much more palatable after recognizing that its five-year average P/E is a much steeper 73.3. Ending fiscal 2025 on a good note, Nvidia has the AI wind at its back with the start of fiscal 2026. Between this and the attractive valuation, now's a great time for growth investors to click the buy button on Nvidia stock.

Nvidia Stock Plunged Again Monday. Is This a Great Chance to Buy?

Nvidia, the leader in artificial intelligence (AI) advanced chips and software architecture, released another strong quarterly report last week, but its stock has plunged more than 13% since then. And while its share price soared in 2024, it's now trading below its levels from six months ago. Investors should understand what's driving the negative sentiment that contributed to Nvidia's post-earnings slump. Here's why now may be the chance to act for those who might have felt they'd missed out on owning Nvidia shares last year. Fears of a slowdown may be overblown Nvidia's recent drop stems from investors' fears that export controls may be coming for high-performing AI chips. Restrictions are already in place that limit Nvidia's most powerful chips from being exported to China. But the semiconductor sector is now being rattled by The Wall Street Journal's report this weekend that Nvidia's latest Blackwell chips are being offered in China through companies in other Asian countries. That has investors fearing other countries -- including Singapore, Vietnam, and others -- could be added to a sanction list for Nvidia's highest-powered chips. But I think Nvidia stock's decline does look like a buying opportunity. First, Nvidia has long been battling fraud and transshipments by bad actors as it works to adhere to U.S. export rules. Second, the company beat expectations for revenue growth once again in its recent fiscal fourth quarter. Revenue soared 114% for its full fiscal year. And the company predicts another record for revenue in the current quarter. While revenue growth may slow this year, sales -- and earnings -- should continue to increase. And the stock is now valued at about 26 times the next 12 months' expected earnings. That's well below its three-year average of 35 times. That makes now a good time to buy this high-growth stock.

Where Will Nvidia Stock Be in 1 Year?

With shares down 10% year to date, Nvidia's (NVDA -7.38%) rocket ship rally has hit a roadblock, even as its chip business continues to break records. Fourth-quarter earnings were yet another slam-dunk success -- but instead of celebrating, investors responded by selling the stock. Are Nvidia shareholders tired of winning, or is something deeper at play? Let's explore what the next 12 months could have in store. Fourth-quarter earnings were another slam dunk Nvidia investors usually have nothing to fear on earnings day. The company has a long track record of beating expectations, and the fourth quarter for fiscal year 2025, which ended Jan. 26, was no exception. Revenue jumped 78% year over year to $39.3 billion, driven by continued strength in the data center segment, where it sells graphics processing units (GPUs) for running and training AI algorithms. This technology is rapidly evolving, and Nvidia frequently upgrades its offerings to boost growth and keep competition at bay. The company's latest Blackwell GPUs will be the key to its near-term success. These chips are expensive, with a price tag between $30,000 and $40,000 per unit. However, with significant improvements in speed and energy use compared to previous-generation hardware, they can actually save clients money as they manage AI-related workloads. According to management, Nvidia has reached full-scale production of Blackwell -- selling $11 billion worth in the fourth quarter mainly to large cloud service providers like Amazon, Microsoft, and Alphabet. What are some of the risks? Despite the undeniably strong earnings, Nvidia's shares tanked around 8.5% on earnings day, suggesting many shareholders are getting jittery. The apprehension might be related to guidance. While management expects first-quarter revenue to grow to $43 billion (up 65%), they see gross margins declining from 78% to 70.6% year over year. Falling margins suggest that competition may be causing Nvidia to lower its prices, which could lead to slower earnings growth. The company faces direct competition from other GPU makers, such as Advanced Micro Devices, which has designed its MI325X to compete with Nvidia's Blackwell GPUs. However, the most significant risk might be from custom chips. Custom chips are optimized for specific applications, eliminating unnecessary components and potentially making them cheaper and more energy-efficient than Nvidia's general-purpose GPUs. While many of Nvidia's clients already use custom chips in small numbers, this trend could grow. In February, OpenAI (the maker of ChatGPT) finalized its design with Taiwan Semiconductor Manufacturing for a custom chip with the goal of mass-producing it next year and reducing reliance on Nvidia. Even if competition doesn't challenge Nvidia's market share, it could hurt its pricing power and margins by making clients more price-sensitive. Another threat comes from the Chinese start-up DeepSeek, which created a competitive large language model (LLM) using Nvidia's older H800 chips. DeepSeek's achievement could raise questions about whether Nvidia's latest hardware is even necessary. Don't expect much stock price growth this year With a market cap of $2.9 trillion, Nvidia has limited potential for stock price growth, even in the best-case scenario. The larger something is, the more force is needed to move it. And while the industry-leading chipmaker will likely enjoy top-line expansion, its margins could face pressure as clients turn to custom chips and reevaluate the amount of money they are pouring into what remains a highly speculative industry. That said, Nvidia still seems like a decent value. With a forward price-to-earnings (P/E) multiple of just 28, shares are in line with the Nasdaq-100's forward estimate, despite the company's excellent growth rate. This valuation prices in much of Nvidia's potential headwinds, so a big crash looks unlikely, absent deterioration in macroeconomic conditions.

Are Nvidia's Market-Beating Gains Over? The Evidence Is Piling Up, and Here's What It Shows. | The Motley Fool

Nvidia (NVDA 1.13%) wowed investors over the past five years, soaring a mind-boggling 1,500%. The company delivered this top performance thanks to its dominance in one of today's most exciting and high-growth fields -- artificial intelligence (AI) -- a market expected to grow from about $200 billion right now to more than $1 trillion by the end of the decade. Quarter after quarter, Nvidia has delivered double-digit and triple-digit revenue growth to record levels in the billions of dollars and also has been highly profitable on sales. The company sells the world's fastest graphics processing units (GPUs), or chips that power crucial AI tasks, along with an entire portfolio of related products and services. Chief Executive Officer Jensen Huang, in a BG2 podcast last fall, even referred to the company as the "on ramp" to anything AI, and his company serves players from start-ups to market giants like Microsoft and Amazon. All of this has kept the share-price momentum going up -- until recently. Nvidia shares slipped back in January after news from start-up DeepSeek prompted investors to question the need for Nvidia's most expensive chips, and in recent days, uncertainty as to how the government's policies will impact the economy have continued to weigh on the shares. The stock now is down more than 13% year to date. It's fair to ask this question: Are Nvidia's market-beating gains over? The evidence is piling up, and here's what it shows. First, though, it's important to consider Nvidia's market position today. Thanks to the top performance of Nvidia's GPUs, the company holds an 80% share of the AI chip market. The complete offering of solutions, from networking to software, means Nvidia can accompany customers along their entire AI development and use paths. In the recent full year, this translated into triple-digit revenue growth to a record of more than $130 billion. And profitability remained high, with gross margin surpassing 70%. What are some of the negative points that have weighed on the stock in recent times? DeepSeek's announcement that it had trained a model for only $6 million on lower-cost Nvidia chips sparked concern that Nvidia's customers may cut their AI budgets and try to do the same. Major technology companies have been spending billions of dollars annually on AI, and much of that is directed to Nvidia for the purchase of GPUs to power the training and inferencing of models. Nvidia dispelled most of the concerns. The chip giant explained the need for high-powered GPUs for one of the next stages of AI growth -- reasoning inference, or the "thinking" process that leads to models solving complex problems. On top of this, it quickly became clear that tech giants haven't abandoned AI spending and continue to pile into Nvidia's top offerings. Two remaining headwinds, though, are the government's export controls on AI chips to China, which have reduced Nvidia's sales there, and the U.S. rollout of tariffs on imported goods from China, Canada, and Mexico. Nvidia said during its recent earnings call that sales in China are half of the levels prior to the launch of export controls back in 2022. Though tech companies have asked the Trump administration to rethink the policy, Bloomberg recently reported that the president may actually toughen the restrictions. As for the tariffs on imports, they could result in higher manufacturing costs for companies like Nvidia that manufacture products outside of the U.S. Some economists have warned that the tariffs may lead to rising inflation and a longer high-interest-rate environment. All of these uncertainties could put the brakes on Nvidia's stock performance in the near term. At the same time, though, it's important to remember that Nvidia's business is going strong, with soaring demand for its products, a fantastic rollout of its new Blackwell architecture, and even more powerful platforms coming soon. As mentioned, recent earnings came in at record levels, and Nvidia said Blackwell brought in $11 billion in revenue during its first quarter on the market. Demand for the product continues to be "extraordinary," Huang says, so there's reason to be optimistic about it generating more growth in the coming quarters. Later this year, Nvidia plans to release Blackwell Ultra, followed by the next-generation Rubin architecture, fulfilling its promise to upgrade its GPUs on an annual basis. Huang suggested he would offer exciting details about these new products at the company's annual GTC AI conference on March 18. Any positive news could offer Nvidia stock a lift. What does the evidence tell us about Nvidia's share-price performance ahead? Nvidia's market-beating days surely aren't over, even if the stock stalls in the near term over certain economic uncertainties and headwinds. Over time, Nvidia's market leadership, innovation, and ability to manage its costs should support earnings growth. (Remember, the company has maintained gross margin above 70% even during an expensive product launch phase.) All of this means it's a great idea to buy Nvidia on the dip and hold for the long term. This way, you could potentially benefit from another wave of explosive stock performance.

Cheap? Nvidia valuation nearing 10-year lows, according to Bernstein

Bernstein is taking a contrarian view on Nvidia stock even as other investors signal that valuations had grown stretched for the broader artificial intelligence trade and as tariffs weigh on sentiment and depress prices. In fact, Bernstein managing director and senior analyst Stacy Rasgon argued that Nvidia's valuation is a buying opportunity for investors, now that the stock is trading at roughly 25 times the next twelve months (NTM) estimated earnings. Ragson says that's the lowest forward valuation level in a year for Nvidia and close to a 10-year low. "Worries that the AI trade is 'over' feel a little premature to us, and valuation is getting increasingly attractive," Ragson said. "Sentiment has clearly pivoted for now on the AI group. However, spending intentions seemingly continue to rise, a product cycle is just kicking off, and we have GTC coming in a few weeks." GTC refers to Nvidia's GPU Technology Conference , an AI conference for researchers, developers, engineers and investors. It's usually been profitable for investors to buy Nvidia at a 25 times NTM P/E ratio, with an average return of 150% over the past 10 years at that level, Ragson said. Bernstein has an outperform rating on Nvidia alongside a $185 per share price target, implying about 62% upside moving forward. Nvidia stock has pulled back close to 14% so far in 2025. Earlier Tuesday, the decline was closer to 17%. NVDA YTD mountain Nvidia over the past year. "It is clear that the Blackwell introduction has not gone as smoothly as the company might have hoped, and there remains added volatility given how laser-focused investors are on this supply chain," Rasgon wrote in a report on Tuesday. "However, it does seem they have worked through things." Ragson cautioned that the potential headwind the Bernstein is most closely keeping an eye on is how stringent President Donald Trump's export restrictions on China will ultimately prove. "For what it is worth, every ~$10B would account for ~25 cents in NVDA EPS; a full China datacenter ban would likely impact EPS ($5-6 baseline?) by mid to high single digits, with the stock already pulling back by much more than that," Ragson said. To be sure, questions have recently emerged as to the actual level of demand for AI applications and projects. Microsoft recently slashed some of its leases for data centers , walking away from its most ambitous expansion plans and signaling that the company backing OpenAI may be reappraising the future growth of generative artificial intelligence.