Nvidia's Stock Poised for Potential Surge Amid AI Spending Boom and Earnings Anticipation

Amazon, Microsoft, Alphabet, and Meta Just Gave Nvidia Great News. But Does That Make The Stock A Buy Before Feb. 26? | The Motley Fool

Nvidia's "Magnificent Seven" peers are doubling down on their AI infrastructure spending this year. The stock market appears to be in the middle of quite the storm as of late. In the final days of January, a Chinese start-up called DeepSeek sent shock waves around the world after it released an artificial intelligence (AI) model similar to ChatGPT -- and claims to have trained its AI with legacy architectures that aren't widely leveraged by U.S. developers. While technology stocks in general have been more volatile since DeepSeek's arrival, none has taken a hit as hard as Nvidia (NVDA 2.63%). Investors are panicking that Nvidia's newer chipware may not be as much of a necessity, given DeepSeek's claims. Although the uncertainty surrounding Nvidia's future prospects is disorienting, some of the company's biggest partners have been dropping clues as to how DeepSeek is influencing their own AI roadmaps. I'll analyze what these trends are and assess how they might impact Nvidia. Nvidia makes its fortune primarily through its compute and networking business, which sells advanced chipsets called graphics processing units (GPUs). GPUs are integral for generative AI applications, and are primarily housed in large data centers. While DeepSeek claims to have built its AI using Nvidia's old H800 GPUs, it's been difficult to verify how accurate that is. Nevertheless, all of Nvidia's "Magnificent Seven" peers have reported earnings for the full calendar year 2024, and there is a common thread stitching their broader AI fabric together. Microsoft kicked things off by announcing the company will be spending $80 billion this year on data centers and other AI infrastructure projects. Meta Platforms followed up with its own aggressive spending plans -- hinting that the company could see capital expenditures (capex) up to $65 billion this year. Lastly, Alphabet and Amazon are projected to spend an estimated $180 billion combined on AI capex this year. On the surface, big tech's rising capex plans this year should be seen as a positive thing for Nvidia. However, when Nvidia reports earnings on Feb. 26, there is one thing in particular I think investors need to be laser-focused on. Investors should listen carefully to management's commentary as it relates to the spending from big tech I outlined. While Nvidia isn't going to capture all of this spend, investors should still be able to get a glimpse into how much capex the Magnificent Seven will be allocating toward Nvidia. In my eyes, the best way to figure this out is to look at Nvidia's financial guidance. If the company's growth rates are accelerating, I'd say this is a good proxy that big tech will be spending heavily on Nvidia's newest chip architectures this year. But on the flip side, if Nvidia's guidance calls for a material deceleration in growth, it could be that its biggest customers are still buying from Nvidia, but doing so in a more protracted way. It's rare that I encourage timing an investment. As long-term investors, buying stock on a specific day isn't the most important factor. Rather, it's more important to reassess your conviction in your holdings, and so long as you remain optimistic, using a strategy of dollar-cost averaging over the course of many years is generally a recipe for success. Considering history suggests that Nvidia stock will indeed rise following its fourth-quarter earnings, combined with big tech's capex plans just for this year, and the share price recovery from the DeepSeek sell-off pictured, I'm cautiously optimistic that Nvidia stock is a lucrative opportunity right now.

AI Stock Sell-Off: 1 Unbelievable Bargain Investors Need to Take Advantage of Before It Soars on Feb. 26 | The Motley Fool

Although the artificial intelligence (AI) sell-off due to DeepSeek's generative AI model innovation was short-lived, a handful of stocks are still off their peaks. One of them is AI king Nvidia (NVDA 2.63%), a company that provides the computing power necessary to train all of these AI models. At the time of this writing, Nvidia is still over 10% down from its 2025 high, although it was down over 20% at the depths of the sell-off. I still think this slight sale price represents a fantastic buying opportunity, as the stock looks primed to soar after Feb. 26. On Feb. 26, Nvidia will report its fourth-quarter of fiscal year 2025 earnings (ending around Jan. 31). Nvidia's earnings report has become quite the event because everyone is curious if they are going to continue posting ludicrous growth numbers. For Q4, management expects revenue of $37.5 billion, which would indicate 70% year-over-year growth. Wall Street analysts are convinced that Nvidia undershot its revenue projection, as they estimate 73% growth on average. This is because Nvidia has a strong track record of exceeding expectations. In Q3, management expected $32.5 billion but generated $35.1 billion. For Q2, they expected $28 billion but generated $30 billion. Considering how much money has been spent on AI over the past quarter, I'd say that Nvidia likely exceeds that $37.5 billion mark they set for themselves. Nvidia's business has been so strong because of its best-in-class graphics processing units (GPUs) and software. GPUs have a distinct advantage over CPUs: They can process multiple calculations in parallel, resulting in far greater computing power. This effect can be amplified by combining thousands of GPUs in a cluster. While the AI computing hardware buildout was significant in 2023 and 2024, 2025 will represent another peak in AI hardware spending. Some of the biggest companies have indicated that a large chunk of the capital expenditures for 2025 will be dedicated to AI hardware, and these numbers are incredibly high. Meta Platforms plans to spend between $60 billion and $65 billion on capital expenditures this year, and Alphabet plans to spend $75 billion. For reference, this is what the capital expenditures over a rolling 12-month period looked like for both companies. A huge chunk of money will be spent in 2025, and Nvidia is primed to benefit from that spending. However, the stock doesn't look like it has priced much of that in. Despite a promising 2025 ahead, Nvidia's stock really doesn't look all that expensive anymore. At 52 times trailing earnings and 30 times forward earnings, it's priced pretty cheaply, considering that Wall Street analysts expect 52% revenue growth in fiscal year 2026. Now, let's compare Nvidia's growth prospects and valuation to some other big tech companies. From a forward earnings perspective, Nvidia's stock is cheaper than Apple's and Microsoft's stock. If Nvidia can keep up any level of growth past 2025, then it looks like an absolute no-brainer at these prices. I'm confident that Nvidia will report strong Q4 results and likely exceed expectations. Considering the amount of money that its largest clients are planning on spending this year versus last year, 2025 also looks primed to be a phenomenal year for Nvidia. I wouldn't be surprised if the stock jumps to new all-time highs following the earnings report, which means investors must take advantage of the sale price before it's too late.

Prediction: Nvidia Stock Is Going to Drop After Feb. 26 | The Motley Fool

Tech giants are dumping mountains of cash into artificial intelligence (AI) data centers. Microsoft plans to spend $80 billion this year to expand its AI capacity. Amazon is boosting its total capital spending, spread across its retail and cloud businesses, to $100 billion to accelerate its AI efforts. And Meta Platforms will pour $65 billion into its data centers to fuel its AI ambitions. On the surface, this all sounds great for Nvidia (NVDA 2.63%) stock. The company dominates the market for powerful AI accelerators, and second place AMD has already put forth a disappointing forecast for its own AI chips sales this year. Nvidia is going to scoop up the lion's share of the spending that goes toward AI accelerators. Forecasts for AI accelerator sales paint a rosy picture for Nvidia. AMD, for example, once predicted that AI accelerators would generate $500 billion in industrywide revenue in 2028. However, investors need to ask an important follow-up question: How can that spending possibly be justified? If companies are going to spend half-a-trillion dollars a year on AI accelerators, not to mention many billions more on other data center gear, those investments will need to pay off in the form of new sources of revenue or cost savings. Is that realistic? What will generate that new revenue? Nvidia's valuation is built on optimism -- namely, optimism that its revenue and profit can continue to grow at blistering rates for years. The stock currently trades for more than 40 times expected earnings for fiscal 2025. This is a company that's already worth more than $3 trillion and generated $20 billion in adjusted net income last quarter. The market for AI accelerators must continue to grow rapidly for Nvidia's stock price to make any sense. It's not that investors are discounting the possibility that demand for AI accelerators flatlines -- it's that investors are discounting the possibility that demand collapses. What will happen to Nvidia stock if, after Microsoft, Amazon, and Meta hurl hundreds of billions of dollars into AI data centers, those companies fail to generate a reasonable return on investment? The AI investment boom feels like a massive case of FOMO (fear of missing out). Tech giants are terrified of being left behind, so they're throwing caution to the wind. There's genuinely an enormous amount of demand for AI computing capacity right now, but how much of that is experimentation? In other words, how much of that is companies trying out AI to see if it makes financial sense? When some of those experiments don't pan out, what will happen to demand? Then there's DeepSeek, the Chinese company that trained an AI model that can compete with the best AI models U.S. companies have to offer for a fraction of the price. If training top-tier AI models no longer requires megaclusters of AI accelerators, what will happen to demand? I'm calling it: Peak Nvidia is almost here, and it's close to the point where the stories and predictions keeping the AI boom afloat start to fall apart. It's not that AI isn't an impressive and useful technology. Like the internet, it's revolutionary. But also like the internet 25 years ago, it's creating expectations that appear untethered from reality. The internet changed the world but also ruined plenty of investors along the way. I could be very wrong about this. It's certainly possible that the hundreds of billions of dollars being spent on AI infrastructure will make financial sense in the end and demand for AI accelerators will continue to grow far into the future. Maybe Nvidia will put out a stellar forecast that drives the stock to new highs. Anything is possible. Still, I don't think I'd want to be an Nvidia shareholder on Feb. 26 when the company reports its latest results. Expectations are sky high, and any hint of trouble could send the stock plunging.

Prediction: Nvidia Stock Is Going to Surge After Feb. 26 | The Motley Fool

Since the beginning of 2023, Nvidia (NVDA -0.58%) has added a whopping $2.8 trillion to its market capitalization on the back of soaring demand for its data center chips, which are the gold standard for developing artificial intelligence (AI). At the same time, Nvidia stock is trading down 11% from its record high set in early January 2025 following a sharp sell-off over the past month. The sell-off was sparked by news that China-based research lab, DeepSeek, has found a way to train competitive AI models with a fraction of the computing power (and financial resources) of its American peers. Investors feared this would trigger a collapse in the demand for data center chips, thus crushing Nvidia's core business. On Feb. 26, Nvidia will report its latest financial results for its fiscal 2025 fourth quarter (ended Jan. 31), and I think the information it contains will squash some of the recent investor concerns. Here's how I predict the stock will react once the results hit the wires. Nvidia's H100 graphics processor (GPU) was the hottest AI data center chip in the world during 2023, helping the company capture an incredible 98% market share. It remains a top seller but it was superseded by the H200, and then an entirely new generation of GPUs based on Nvidia's Blackwell architecture. The Blackwell-based GB200 NVL72 system can perform AI inference at 30 times the pace of the equivalent H100 system, paving the way for developers to deploy the most advanced AI models to date. Nvidia CEO Jensen Huang told investors demand was "insane" shortly after Blackwell's broad release at the end of 2024, and from what we know so far, sales are living up to expectations. However, the DeepSeek saga rocked Wall Street's confidence in January. The Chinese start-up revealed it spent just $5.6 million to train its V3 AI model, yet it matches the performance of some of the best models from American start-ups like OpenAI, which have invested tens of billions of dollars to reach this point. Moreover, DeepSeek used older generations of Nvidia's GPUs, which left investors wondering whether AI developers really need the latest and greatest Blackwell chips. But some of those concerns have since been put to bed by Nvidia's largest customers. Meta Platforms CEO Mark Zuckerberg thinks a drop in training workloads will be offset by inference workloads, which are now consuming an increasing amount of computing power because newer AI models spend more time "thinking" (which is known as test-time scaling). Meta expects to spend up to $65 billion on AI data center infrastructure during 2025, up from $39.2 billion last year, so it certainly isn't pulling back. Alphabet also plans to significantly increase its hardware investments this year, forecasting a record $75 billion in capital expenditures (capex). Then there is Amazon, which recently told investors it could spend over $100 billion in 2025 to build more AI infrastructure. If all of Nvidia's top customers are significantly increasing their investments in chips and data centers, it's hard to envision a scenario where the company's financial results disappoint. Wall Street's consensus forecast (provided by Yahoo! Finance) suggests Nvidia's fourth-quarter revenue will come in at $38.1 billion, which is even higher than the company's own estimate of $37.5 billion. If previous quarters are anything to go by, around 88% of that revenue will come from the data center segment, led by GPU sales. The Q4 result would take Nvidia's total fiscal 2025 revenue to a record $129.3 billion, representing 112% growth compared to fiscal 2024. But the company's outlook for the future is also something Wall Street will be watching closely. Analysts are currently forecasting nearly $42 billion in revenue for Nvidia's fiscal 2026 first quarter, so if management's guidance tops that number, it will be a great sign that DeepSeek concerns are mostly overblown. When Nvidia reported its last set of results for the third quarter on Nov. 20, its stock fell by 7% over the next five days or so. Short-term fluctuations in any stock are mostly just noise, and Nvidia had recovered almost completely just two weeks later. It speaks to the importance of maintaining a long-term view, especially with an opportunity like AI, which is likely to unfold over a period of years, not weeks or months. The recent DeepSeek-related dip in Nvidia stock has created an enticing opportunity for investors. The stock currently trades at a price-to-earnings (P/E) ratio of 51.1, which is a 13% discount to its 10-year average P/E ratio of 59.2. In other words, assuming Wall Street's numbers prove to be accurate, Nvidia stock would have to soar by 102% this year just for its P/E ratio to trade in line with its 10-year average. If Nvidia's Q4 report adds further evidence that DeepSeek-related developments aren't hurting demand for GPUs, its stock is likely destined for new record highs over the next few months. Considering the recent commentary and capex forecasts from the company's biggest customers, I think the upcoming report on Feb. 26 is far more likely to deliver a positive surprise than a negative one.

Should You Buy Nvidia Stock Before Feb. 26? History Has a Clear Answer. | The Motley Fool

We'll learn a lot when Nvidia reports fourth-quarter and full-year 2024 earnings. The past couple of weeks have been quite turbulent in the capital markets. In late January, a Chinese start-up called DeepSeek sent investors into a panic as the company claimed to have built powerful artificial intelligence (AI) applications for much less than what businesses in the U.S. are spending. As a result, technology stocks have been spiraling downward. One company that has been hit hard over the DeepSeek narrative is Nvidia (NVDA 2.87%). With the company scheduled to report fourth-quarter and full-year 2024 earnings on Feb. 26, investors are anxiously waiting to see just how much DeepSeek may affect Nvidia's business. Below, I'm going to explain why investors may not need to wait until later this month to assess if Nvidia stock is a good buy heading into earnings. The bear narrative surrounding Nvidia during the past two weeks is that if DeepSeek's claims are true, businesses may scale back their AI infrastructure spending. If this were to happen, demand for Nvidia's expensive data center graphics processing units (GPU) would likely slow -- thereby calling into question what the company's future prospects look like. Thankfully, Nvidia's "Magnificent Seven" cohorts have already reported earnings. And one common thread stitching each of these behemoths together is that spending on AI infrastructure is on the rise. Comments made by management from Microsoft, Meta Platforms, Alphabet, and Amazon have signaled that capital expenditure (capex) budgets for this year could be in excess of $300 billion if they all spend at the high end of their provided ranges. This is an important figure to understand, as each of these companies already uses Nvidia products. And while I'll admit that these companies are also investing in their own custom chipware, it's unlikely that they will migrate entirely away from Nvidia anytime soon. For this reason, I see the rising AI infrastructure spending as a positive sign for Nvidia -- and one that underscores the company's robust growth prospects. The chart below shows Nvidia's stock price movement during the past three years. I've annotated the company's earnings reports as seen in the purple circles with the letter "E" in the middle. One thing is abundantly clear from the trends illustrated above: Nvidia shares usually rise after an earnings report. While the days leading up to or shortly after an earnings call may carry some more pronounced volatility, Nvidia's resilience always seems to shine through in the end. If you're going purely based on history, the trends seen in the stock chart above would suggest that Nvidia stock will be headed higher after it reports earnings on Feb. 26. But smart investors know all too well that past performance shouldn't be used as your sole barometer. To me, the more important idea explored here is that Nvidia's largest customers have all come out and said that they remain committed to their AI growth roadmaps. And a subtle pillar supporting these AI ambitions is significant spending on capex. In theory, this bodes very well for Nvidia's future. While exact timing isn't something I really encourage, I think this is a unique situation in which it's not worth waiting a few more weeks just to hear what Nvidia's management has to say about DeepSeek. The breadcrumbs dropped by big tech should serve as a good proxy for what Nvidia investors can expect in terms of growth. For this reason, I'd buy the dip in Nvidia now -- before the company's earnings report later this month. The current sell-off represents an unusual window during which Nvidia stock is trading at an abnormally low valuation, which I think is worth taking advantage of.

Sundar Pichai Recently Delivered Spectacular News for Nvidia Stock Investors | The Motley Fool

Nvidia (NVDA 2.63%) stock is currently down 12% from its all-time high. It suffered a sharp sell-off in January after China-based start-up DeepSeek asserted that it had trained a competitive artificial intelligence (AI) model using a fraction of the computing power that had been deployed by leading U.S.-based developers like OpenAI. Investors feared that DeepSeek's techniques would be adopted by other AI developers, leading to a substantial drop in demand for Nvidia's high-end graphics processing units (GPUs), which are the best hardware available for developing AI models. However, those concerns might have been overblown. Google parent Alphabet (GOOG -0.54%) (GOOGL -0.49%) is a big buyer of Nvidia's AI data center chips, and on Feb. 4, its CEO, Sundar Pichai, made some comments that should make Nvidia's investors feel much better. DeepSeek was established in 2023 by a successful Chinese hedge fund called High-Flyer, which had been using AI to build trading algorithms for years. DeepSeek released its V3 large language model (LLM) in December 2024, followed by its R1 reasoning model in January, and their competitiveness with some of the latest models from OpenAI and other start-ups got the tech sector buzzing. Since DeepSeek's work is open source, the industry quickly learned some important details. The start-up claims to have trained V3 for just $5.6 million (not including an estimated $500 million in chips and infrastructure, according to SemiAnalysis), which is a drop in the bucket compared to the tens of billions of dollars spent by companies like OpenAI to reach their current stage of development. DeepSeek also used older generations of Nvidia's GPUs like the H100, because the U.S. government banned the chip maker from selling its latest hardware to Chinese firms (to protect America's AI leadership). It turns out DeepSeek implemented some unique innovations on the software side to make up for the lack of computational power. It developed highly efficient algorithms and data input methods, and it also used a technique called distillation, which involves using the knowledge from an already-successful large AI model to train a smaller model. In fact, OpenAI has accused DeepSeek of using its GPT-4o models to train DeepSeek R1, by prompting the ChatGPT chatbot at scale to "learn" from its outputs. Distillation rapidly speeds up the training process because the developer doesn't have to collect or process mountains of data. As a result, it also requires far less computing power, which means fewer GPUs. Naturally, investors are worried that if every other AI developer adopted this approach, it would trigger a collapse in demand for Nvidia's chips. On Feb. 26, Nvidia will report its financial results for its fiscal 2025, which ended Jan. 31. The company expects to have generated $128.6 billion in total revenue, which would be a whopping 112% increase from the previous year. Recent quarterly results suggest around 88% of that revenue will be attributable to its data center segment, thanks to soaring GPU sales. According to Wall Street's consensus forecast (provided by Yahoo), Nvidia could set another record in its current fiscal year 2026, with $196 billion in total revenue potentially in the cards. Hitting that estimate will depend on further demand for GPUs from AI developers, so it's easy to understand why investors are nervous over the DeepSeek news. While the H100 remains a hot product, Nvidia's latest GB200 GPU -- which is based on its Blackwell architecture -- can perform AI inference at up to 30 times the speed. Inference is the process by which an AI model absorbs live data (like a chatbot prompt) and produces an output for the user. It typically comes after the initial training phase (more on this in a moment). The GB200 is currently the gold standard for AI data centers, and demand was significantly outstripping supply when it started shipping to customers at the end of 2024. Pichai held a conference call with Wall Street analysts on Feb. 4 to discuss Alphabet's 2024 fourth quarter results. In response to one of their questions, he said there has been a notable shift in the allocation of computing power over the last three years, with a growing amount going toward inference compared to training. Pichai said newer reasoning models (like DeepSeek's R1 and Alphabet's Flash Thinking models) will only accelerate that shift. These models spend more time "thinking" before producing a response, so they require significantly more computing power than their predecessors. The technical term for that is test-time scaling, and it's a way for AI models to deliver more accurate information without conducting more pre-trailing scaling (which involves feeding models endless amounts of new data). Meta Platforms CEO Mark Zuckerberg has similar thoughts. He recently said a drop in training workloads won't necessarily mean developers need fewer chips, because capacity is simply shifting toward inference instead. Finally, Alphabet told Wall Street it plans to allocate $75 billion to capital expenditures (capex) during 2025, most of which will go toward data center infrastructure and chips. That figure represents a significant increase from its 2024 capex of $52 billion, so the company certainly isn't pulling back. All in all, it appears the demand picture for Nvidia's GPUs is still very much intact. Considering its stock is trading at an attractive valuation right now, the recent dip might even be a buying opportunity.

300 Billion Reasons to Buy Nvidia Stock Like There's No Tomorrow | The Motley Fool

After a huge run higher, Nvidia (NVDA 2.63%) stock hasn't even been keeping up with the overall market in recent months. There are several reasons for that, but the big question for investors is whether it's now time to take advantage of Nvidia's stagnant share price. The stock soared about 85% over the last year, yet it is lower than it was four months ago, even as the S&P 500 has a total return of about 4% in that time. But now it looks like there are over 300 billion more reasons to buy the stock. That's because several big tech companies plan to spend as much as $320 billion on data centers and artificial intelligence (AI) infrastructure over the next year. Nvidia's recent success is relatively easy to explain. Its advanced AI graphics processing unit (GPU) chips are in high demand. Using management's guidance for its soon-to-be-reported fiscal fourth quarter, revenue for the fiscal year ended in late January should show year-over-year growth of about 110%. That's especially impressive considering quarterly revenue is approaching $40 billion. Nvidia also shared its plans with investors for continued innovation that should keep driving demand. Sales of its H100 and H200 GPU chips have been boosting revenue growth, and Nvidia now has its Blackwell AI architecture in production. CEO Jensen Huang has called demand for Blackwell "insane." Investors will hear an update on its Blackwell sales when Nvidia reports earnings on Feb. 26. The company might also discuss the next-generation Rubin AI platform that is due in 2026. One recent headwind for Nvidia stock was the surprising announcement last month from privately owned Chinese start-up DeepSeek. That company reportedly created a high-performing large language model (LLM) for just $6 million. While many question the authenticity of that total capital cost, the DeepSeek product raised uncertainty about how much large-cap tech companies would continue to spend on Nvidia AI products. But those companies aren't throttling back on spending. Meta Platforms, Amazon, Alphabet, and Microsoft each announced spending plans for data centers and AI infrastructure in 2025. As a group, the investments could total as much as $320 billion over the course of just one year. Amazon expects to lead the way with $100 billion in capital expenditure. CEO Andy Jassy stated, "The vast majority of that capex spend is on AI for AWS (Amazon Web Services)." Alphabet plans about $75 billion and Meta $65 billion. Microsoft will continue on its plan for $80 billion in AI investments through June of this year. That company said it is already seeing returns on its investment. Satya Nadella, chairman and CEO of Microsoft, noted, "Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year over year." Nvidia is the clear leader in hardware for AI infrastructure and is arguably the biggest benefactor from all that capital spending. On top of those tailwinds related to AI data center spending, Nvidia has other growing segments. Its gaming business generates the second most revenue. Gaming revenue has accelerated in each of the last three quarters, reaching its highest level since Nvidia's quarterly period ended May 1, 2022. Its professional visualization business provides a platform for creating industrial AI simulations and uses AI to drive efficiencies for industrial developers. That segment's revenue has increased in each of the past three quarters and has more than doubled in the last two years. Automotive and robotics revenue has also accelerated, with growth in each of the last five quarterly periods. Those other business segments use AI and also offer software solutions to Nvidia's AI hardware customers. That helps to provide a flywheel effect as its next-generation AI architecture continues to improve and be utilized in its various platform solutions. The upcoming quarterly report could bring share price volatility, but investors should look to hold Nvidia for its long-term potential. A pullback that might come from the quarterly report would just provide an opportunity to buy more Nvidia stock.

Nvidia's Stock Hasn't Been This Cheap in Nearly a Year. Here's What History Says Happens Next. | The Motley Fool

Nvidia's (NVDA 2.63%) stock isn't cheap all that often, and any time it has sold off over the past few years has been an incredible buying opportunity. Right now, Nvidia is still well off of its all-time high thanks to the scare caused by DeepSeek's revolutionary artificial intelligence (AI) model, which was reportedly trained more cheaply than most U.S. models. The prevailing fear is that not as much computing power is needed to train AI models as once thought, which would harm Nvidia's business. While there is some merit to this thinking, I don't think it's accurate, as the spending projections from some of Nvidia's biggest clients keep increasing. As a result, I think history will repeat itself, making right now a fantastic buying opportunity for Nvidia's stock. Nvidia has been dominant over the past few years because it is powering a large chunk of the AI innovations. Its graphics processing units (GPUs) can process calculations in parallel, which makes them far more useful for intense workloads like training an AI model. Furthermore, when companies buy a GPU, they don't buy just one or two; they buy thousands and connect them in clusters, further amplifying their computing power. Nvidia's GPUs have become the top pick for anyone in the AI field, as its results back it up. Nvidia has reported stellar revenue growth quarter after quarter, driving the stock to new heights. While it's true Nvidia's revenue growth is slowing, 94% growth is nothing to be disappointed with. As Nvidia becomes a larger business, its growth rate will naturally slow, as it becomes harder to grow the larger you get. Still, that isn't stopping Nvidia from posting jaw-dropping growth numbers: Wall Street analysts expect 72% growth for Q3 FY 2025 and 52% growth to $196 billion for FY 2026. However, those numbers were called into question after DeepSeek announced a more efficient way to train its generative AI model. While these efficiency gains are real, and many companies are working to integrate them into their models, they don't change the fact that a lot more computing infrastructure is needed to handle all these AI workloads. This has led to many of Nvidia's largest clients stating that their capital expenditures for 2025 will be much higher than in previous years. This bodes well for Nvidia's business, as these companies are among its biggest clients. Clearly, Nvidia's business will remain strong over the next year and likely well past that. Combined with Nvidia's stock being on sale, I'd say the future looks bright for both the stock and the company. The last time Nvidia's stock was this cheap in terms of its trailing price-to-earnings (P/E) metric was in August 2024. Since then, the stock has risen around 25%, even with the DeepSeek-induced sell-off. You have to go even further back to find when Nvidia's stock was trading under 30 times forward earnings. That was in May 2024, and the stock has risen nearly 60% from that level. Those are incredible returns, and any investor would be satisfied with a stock like that in their portfolio. History is on Nvidia's side, and the stock looks historically cheap. Many of Nvidia's largest clients have stated that AI spending is going to keep increasing, which bodes well for the stock and the company. As a result, Nvidia's stock looks like a strong buy right now.

History Says Now Could Be an Ideal Time to Buy Nvidia Stock Hand Over Fist | The Motley Fool

Does the past provide clues about what the future holds? Sometimes it does. This could be great news for anyone considering investing in Nvidia (NVDA 2.87%). History says now could be an ideal time to buy Nvidia stock hand over fist. Artificial intelligence (AI), especially the rise of generative AI, has provided a massive tailwind for Nvidia in recent years. The stock has delivered a return of nearly 21x since early 2020 and is up more than 80% during the last 12 months. However, Nvidia's share price has fallen over the last few weeks. Chinese company DeepSeek's launch of a low-cost AI model caused investors to worry that the surging demand for Nvidia's GPUs could wane. DeepSeek claimed to develop its R1 reasoning model, which stacks up well against the best AI models available, using older Nvidia chips. But anytime Nvidia stock has dropped 10% or more in the past, it presented a fantastic buying opportunity. Such declines have happened more often than you might think. Nvidia's share price has sunk by a double-digit percentage from its previous peak at least once every year since 2015 with one exception. The stock bounced back and eventually reached a new high each time. This rebound effect isn't the only way history supports the premise that now is an ideal time to invest in Nvidia. Another pattern to consider is how the stock has performed after the company's quarterly earnings updates. It's most instructive to examine this earnings anticipation factor since OpenAI's launch of ChatGPT kicked off the generative AI boom in late 2022. The chart below shows Nvidia's stock performance in the weeks following the announcement of its quarterly results in February 2023. Here's how Nvidia stock performed after the next quarterly earnings update: Did this trend continue? For the most part, yes. Sure, there were some exceptions. However, Nvidia has a great track record of beating Wall Street's earnings expectations. This matters because Nvidia is scheduled to announce its fiscal year 2025 fourth-quarter results just a few weeks from now on Feb. 26, 2025. Importantly, this will be the company's first quarter to report revenue from its powerful new Blackwell chips. Analysts project that Nvidia's Q4 earnings will jump 63% year over year. But with Nvidia CEO Jensen Huang indicating that the demand for Blackwell is "insane," Wall Street's estimates could be too pessimistic. To be sure, history doesn't always repeat itself. Just because Nvidia's share price has always risen after double-digit percentage declines in the past doesn't mean it will do so this time. The company's track record of beating earnings estimates might not continue. Importantly, Nvidia hasn't faced the threat in its recent past that DeepSeek presents now. Nvidia's sky-high valuation (its shares trade at 28.5 times trailing 12-month sales) reflects expectations of tremendous growth. Anything that derails that growth would almost certainly cause the stock to tumble. And many investors are concerned that DeepSeek's AI technology could negatively impact Nvidia's growth. Aswath Damodaran, the NYU finance professor known as the "Dean of Valuation," is one of those investors. He recently wrote, "DeepSeek's abrupt entry into the AI conversation has the potential to change the AI narrative, and as it does, it may also change the storylines for the many companies that have spent the last two years benefiting from the AI hype." He put Nvidia at the top of the list of those companies that have been helped by "the AI hype." However, several of Nvidia's largest customers provided quarterly updates over the last few weeks. All of them plan to significantly increase their capital investments and are specifically doing so to boost their capacity to train and deploy AI models. That's encouraging news for anyone who agrees with the adage that "history doesn't repeat itself but it often rhymes."

Nvidia Stock Is Doing Something It's Only Done Twice Before in the Past 4 Years. History Says This Will Happen Next. | The Motley Fool

Nvidia (NVDA -0.58%) stock has been one of the market's best performers in recent times, even posting the biggest gain last year in the Dow Jones Industrial Average with a 171% increase. What's the reason for this momentum? The company has built tremendous leadership in what may be today's highest-growth and highest-potential market: artificial intelligence (AI). Today's $200 billion AI market is forecast to reach more than $1 trillion by the end of the decade, and AI holds the potential to transform many industries and our daily lives. All of this could generate significant revenue growth for companies in the space. Nvidia's earnings already are benefiting, since the company sells the products and services -- from chips to software -- needed to develop AI and apply it. As a result, the tech-giant's revenue has advanced in the double-digits and triple-digits, quarter after quarter, reaching records well into the billions of dollars. The stock price, as mentioned, has followed. But recently, the stock has retreated from its highs and has done something it's only done twice before in the past four years. A look at history shows us what's likely to happen next. First, here's a quick summary of Nvidia's story so far. The tech player is the designer of the world's top-performing graphics processing units (GPUs), or high-powered chips critical for AI tasks like the training and inferencing of models. In Nvidia's earlier days, it sold GPUs mainly to the video gaming market, but as it became clear these chips could play a key role in other industries, Nvidia expanded into these areas. On top of this, Nvidia built an entire ecosystem of related products and services to become the one-stop shop for any customer creating an AI program. Today, Nvidia serves the world's biggest technology companies -- from Meta Platforms to Microsoft -- and is at the center of key AI projects. For example, when OpenAI and the U.S. government recently announced a new $500 billion AI infrastructure project, they named Nvidia as a key technology partner. As mentioned, Nvidia's AI strengths have driven gains in the stock and lifted its valuation so that the stock has traded as high as more than 75x forward earnings estimates within the past four years. As analysts' earnings forecasts have climbed, the stock's valuation has come down somewhat, and it generally has traded for about 48x forward earnings estimates over the past six months. Let's consider the move Nvidia stock has made in recent weeks. The stock has declined and fallen below the valuation of 30x forward earnings estimates. It's only dropped below that level during two other periods over the past four years -- once about a year ago, and the other time in the spring of 2023. History shows that when that happened in the past, the stock then went on to soar in the months to follow. If history is an accurate guide, patterns suggest that Nvidia stock, after the recent dip and decline in valuation, should soon roar higher. Of course, it's important to keep in mind that investors can't always rely on history for guidance. Stocks and the market, in general, have been known to surprise investors. This is why it's key to consider a company's earnings track record and long-term prospects before making any investment decision. With that in mind, there's reason to be confident about Nvidia. Above, I spoke of the company's solid offering of AI products and services and impressive revenue. This revenue also comes with high profitability on sales, with gross margin consistently surpassing 70%. Nvidia has pledged to update its GPUs on an annual basis. It's now launching its Blackwell architecture, and this innovation will make it difficult for rivals to take significant market share. History suggests that Nvidia stock, after its recent pause and drop in valuation, is ripe for a rally -- and that may indeed happen. But what really makes Nvidia a buy is the company's financial strength, market position, and focus on innovation -- three elements that should deliver growth and stock performance over the long haul.

You May Have Sold Nvidia for the Wrong Reason. Here Are 3 Reasons Why You Should Be Buying This Artificial Intelligence Stock Once Again. | The Motley Fool

Nvidia (NVDA 2.63%) has had a forgettable start to 2025 as shares of the semiconductor giant are down more than 3% as of this writing, and multiple factors out of the company's control have played a part in its decline. For instance, the previous Biden administration proposed wide-ranging restrictions on sales of Nvidia's chips to foreign customers, but the impact of those restrictions was mitigated to some extent by the recent announcement of the Stargate project that could see $500 billion being poured into artificial intelligence (AI) infrastructure in the U.S. This development gave Nvidia stock a shot in the arm, but the chip designer would witness another sell-off very soon. Chinese AI start-up DeepSeek released its R1 reasoning model and claimed that it was trained for a paltry $5.6 million. DeepSeek's model was good enough to compete with the o1 reasoning model from OpenAI, a company that has been spending billions to build its AI infrastructure using chips from Nvidia. So, the low-cost nature and efficiency of the Chinese company's model sent Nvidia stock packing. Investors were worried about a potential drop in demand for its graphics cards that are being used for AI training and inference by major cloud computing companies and governments. The semiconductor giant shed almost $600 billion of its market cap in a single day on Jan. 27 following DeepSeek's purported breakthrough. However, a report from semiconductor industry analysis company SemiAnalysis (via Tom's Hardware) suggests that DeepSeek may not have revealed the actual cost of training its AI model. SemiAnalysis points out that DeepSeek reportedly incurred $1.6 billion in hardware expenses. It also adds that the Chinese start-up has access to 50,000 of Nvidia's previous-generation Hopper graphics processing units (GPUs), including 10,000 units of the flagship H100 processor. SemiAnalysis further points out that the $6 million figure highlighted by DeepSeek only refers to the potential money spent on training the model. It doesn't consider other costs associated with research, data processing, fine-tuning the model, and infrastructure expenses. Given that DeepSeek has reportedly spent over $500 million on AI funding since its inception in 2023 and has its own data centers, there is a good chance that the cost of training the R1 model that sent Nvidia stock plunging was actually higher than what's being touted by the Chinese company. If that's indeed the case, then investors may have hit the panic button for the wrong reason. However, the good part is that Nvidia's poor start to the year means that investors have a window to buy this fast-growing company on the dip. Here are three reasons why doing that could turn out to be a smart move. The first reason to buy Nvidia is its valuation. The stock's expensive valuation following its tremendous rally over the past couple of years has been a cause for concern for investors and analysts. However, it is now trading at quite attractive levels. Though Nvidia's trailing price-to-earnings (P/E) ratio of 51 is higher than the tech-laden Nasdaq-100 index's 33.4, the forward earnings multiple of 30 is lower than that. The second reason why investors should consider buying Nvidia is related to DeepSeek. Assuming that DeepSeek's claims are indeed true and it has managed to develop a low-cost model, it could lead to an increase in the demand for AI applications. British economist William Stanley Jevons observed in 1865 that the increased efficiency in coal consumption wouldn't reduce the demand for coal. It would instead spur the usage of coal in more industries. This concept, known as the Jevons Paradox, can be seen in many other applications. For instance, the increasing fuel efficiency of vehicles has reportedly led to an increase in distance traveled while the arrival of low-cost LED bulbs hasn't necessarily brought down electricity bills as people have tended to install more lights because of reduced costs. So, efficient AI models could lead to an increase in their demand, and that's why the need for Nvidia's chips is likely to remain solid. As such, DeepSeek's purported breakthrough isn't necessarily a bad thing for Nvidia. The final reason to buy Nvidia stock following its recent pullback is that cloud computing giants are set to keep spending more money on AI infrastructure. President Donald Trump's $500 billion AI infrastructure push that's being driven by the likes of Oracle, OpenAI, SoftBank, and Abu Dhabi-based AI investment vehicle MGX to build AI data centers will require more chips. Meanwhile, recent announcements from the CEOs of Meta Platforms and Microsoft supporting higher spending on AI also point toward healthy AI chip demand. Finally, a spike in bookings for the advanced machines sold by Dutch semiconductor equipment giant ASML provides further evidence that the appetite for advanced chips to support AI workloads isn't going away. So, it won't be surprising to see Nvidia's fortunes turn around, which is why investors should consider using the recent pullback in this AI stock given the healthy growth that it is capable of delivering in the long run.

Nvidia's cheapest price in a year; here's why history says the best is yet to come

Nvidia stock is at a year-low, presenting a buying opportunity according to The Motley Fool. Concerns about AI efficiency are present, but Nvidia's big customers plan to increase its spending, indicating rising demand. Nvidia's past suggests potential strong returns. The company's GPUs remain crucial for AI advancements. Nvidia's significant revenue growth projections highlight its market position.Nvidia stock is currently at one of its lowest points in the past year, creating an incredible opportunity for investors to buy the stock, as per The Motley Fool. As per reports, recent concerns fueled by Chinese AI startup DeepSeek's new, budget-friendly AI model raised the spectre of Nvidia losing out on future AI infrastructure demand. But there is a good reason to suspect that history will indeed repeat itself, and investors purchasing shares now may be in for great rewards, according to The Motley Fool. The concern regarding Nvidia's future hinges on the assumption that training AI models could be less computationally intensive than initially anticipated. According to The Motley Fool, while this fear is founded on actual advancements in AI performance, it doesn't tell the whole story. According to The Motley Fool, several of Nvidia's biggest customers have stated that they intend to boost their capex in 2025 and will be spending more than in previous years. That's good news for Nvidia since these customers depend on Nvidia's GPUs to fuel their AI breakthroughs, the report added. Meta has outlined a capital spending budget of $60 billion to $65 billion this year, as per the report. Alphabet is reserving $75 billion, and Amazon is planning to spend $100 billion, reported The Motley Fool. These enormous expenditures indicate a red-hot demand for computing infrastructure, and Nvidia, the GPU market leader, will be a huge beneficiary. Nvidia's recent financial results demonstrate its position at the heart of the AI bubble. According to The Motley Fool, the GPUs from the company are crucial to training AI models, and its revenue has been nothing less than phenomenal. While growth does slow down when a company becomes a large business, estimates for 2025 indicate 72% growth for Q3 FY 2025 and 52% growth to $196 billion for FY 2026. Nvidia stock has performed well for investors in the past who bought at a cheap price in terms of its trailing price-to-earnings (P/E) metric comparable valuation levels, as per the report. In August 2024, when Nvidia stock was cheap, the stock had risen 25% since then. Even further back to May 2024, when the stock was priced at less than 30 times forward earnings, the stock had risen nearly 60% from that level and investors got good returns, according to The Motley Fool. According to The Motley Fool, Nvidia's past indicates that it might be an excellent time to invest, particularly with the stock trading below its average price. Who is the CEO of Nvidia? The chief executive of Nvidia is Jensen Huang. He had founded Nvidia in 1993. Is Nvidia a good buy? Nvidia's stock is currently trading lower than usual, presenting a potential buying opportunity, reported The Motley Fool. Despite recent concerns about AI efficiency, the company remains at the heart of the AI boom, with major clients planning significant capital expenditures.

Prediction: Nvidia Stock Will Underwhelm After Feb. 26 for 3 Very Specific Reasons | The Motley Fool

The best days may be in the rearview mirror for the face of the artificial intelligence (AI) revolution. Roughly three decades ago, the advent of the internet and its mainstream proliferation began changing the business world forever. Though this transformation didn't occur overnight, investors have been waiting quite some time for the next game-changing innovation to come along and bolster the long-term growth prospects of corporate America. After an extensive wait, artificial intelligence (AI) appears to have answered the call. Software and systems are being empowered by AI to make decisions, reason, and evolve, all without the aid of human intervention. With use cases in most industries around the globe, it's perhaps no surprise that the analysts at PwC are forecasting a $15.7 trillion benefit to the global economy from AI by 2030. No public company has taken the bull by the horns more during the early stages of the AI revolution than Nvidia (NVDA 2.87%). The company's Hopper (H100) and Blackwell graphics processing units (GPUs) have quickly become the standard for high-compute enterprise data centers responsible for training large language models and running generative AI solutions. But with lofty growth expectations already baked into Nvidia's nearly $3.2 trillion market cap, there are three very specific reasons to believe Nvidia stock is poised to underwhelm following the release of its fiscal 2025 fourth-quarter operating results after the closing bell on Feb. 26. To give credit where credit is due, no chip company is particularly close to matching the computing speed of Nvidia's successor Blackwell chip, or even unseating the Hopper GPU at this point. However, the company has also benefited immensely from AI-GPU scarcity. Overwhelming demand for Nvidia's hardware, coupled with limited supply, has helped it book orders well in advance, as well as charge a premium price for its AI-GPUs. Whereas Advanced Micro Devices was netting in the neighborhood of $10,000 to $15,000 for its Instinct MI300X AI-accelerating chips in early 2024, Nvidia was commanding up to $40,000 for its Hopper chip. The result was a gross margin that peaked at 78.4% in the first quarter of fiscal 2025. The concern for Nvidia on and after Feb. 26 is that computing speed isn't everything in the AI space. It's dominated because it's been able to supply the in-demand hardware businesses are asking for. But as AI-GPU scarcity wanes, so will the company's pricing power and its supercharged gross margin. While most investors have focused on direct competitors, such as AMD, the bigger threat is the possibility of losing out on valuable data-center real estate from its top customers by net sales. Most members of the "Magnificent Seven" are internally developing AI chips of their own. Even though these GPUs are unlikely to surpass the computing potential of Nvidia's Hopper and/or Blackwell chips, they're substantially cheaper and not backlogged. This is a recipe for future orders of Nvidia's hardware from America's most-influential businesses to disappoint. We've already seen Nvidia's gross margin retrace by 380 basis points from its all-time high of 78.4% over the previous two quarters. Don't be surprised if growing internal and external competition, along with waning AI-GPU scarcity, weighs on Nvidia's gross margin and its stock. If there's one thing Wall Street tends to reward, regardless of valuation, it's predictability. Unfortunately, various uncertainties regarding tariffs and export limitations may lead to Nvidia's outlook containing more unknowns than usual. While on the campaign trail, then-candidate Donald Trump was forthcoming about his willingness to use tariffs if elected to promote American interests. The idea behind tariffs is that imposing them on select imports can help domestic manufacturers be more competitive on price. Last week, Trump instituted a 10% tariff on select goods from China. However, a December-released analysis from Liberty Street Economics, which publishes research for the Federal Reserve Bank of New York, found that the stock of public companies exposed to Trump's China tariffs in 2018 and 2019 performed notably worse on the days tariffs were announced than companies that had no exposure. These underperforming businesses also, on average, saw their profits, employment, sales, and labor productivity decline from 2019 to 2021. While Nvidia doesn't import products from China, the world's No. 2 economy is one of its largest hardware purchasers. Strained trade relations between the U.S. and China could jeopardize billions of dollars in quarterly sales for Nvidia. To make matters worse, the Biden administration restricted the export of Nvidia's high-powered AI chips to China for three consecutive years (2022 through 2024). Although President Trump and former President Joe Biden don't see eye-to-eye on much, protecting U.S. AI interests is one of those rare shared points. Trump or his administration are unlikely to loosen the regulations surrounding AI-GPU exports to China. These limitations are likely to be reflected in Nvidia's outlook and may result in cautious commentary from its management team. The third very specific reason Nvidia stock can underwhelm after reporting its fiscal 2025 operating results on Feb. 26 is historic precedent. History has a flawless track record when it comes to next-big-thing innovations, and that's bad news for the face of the artificial intelligence movement. One of the more prevalent concerns for Nvidia is that every game-changing technological innovation for three decades, including the internet, has navigated its way through a bubble-bursting event. Bubbles form because investors have a terrible habit of overestimating how quickly a new technology will be adopted and/or gain mainstream utility. Although there are plenty of use cases, on paper, for AI, most businesses lack well-defined blueprints for optimizing the technology and meaningfully improving their sales and profits from it. If there's a silver lining for Nvidia, it's the company's well-established business segments that pre-date the AI revolution. If the proverbial AI bubble were to burst, Nvidia stock would be partially buoyed by GPU demand for gaming and cryptocurrency mining, as well as demand for its virtualization software. The other historic battle Nvidia will be fighting is against its pricey valuation. In June-July 2024, Nvidia stock surpassed a price-to-sales (P/S) ratio of 40, which has historically been a level that's signaled a top for other market-leading businesses of next-big-thing innovations. Even though Nvidia has backed off its P/S ratio high of last summer, its stock remains pricey -- especially given the laundry list of challenges described above. Even though every Wall Street analyst expects Nvidia stock to rally in 2025, the table appears to be set for it to underperform.

Is DeepSeek's Breakthrough Really a Disaster For Nvidia Stock? | The Motley Fool

Nvidia stock took a giant hit, which could be a terrific buying opportunity. We are constantly reminded not to get too comfortable in the world of investing. When things seem to chug along on autopilot, an innovation shakes things up. A recent example is the late 2022 release of the original ChatGPT, which thrust artificial intelligence (AI) into the forefront and set off a race in an industry worth trillions of dollars. A breakthrough from a Chinese company called DeepSeek may be shaking things up again (or there may be more to the story). There are several layers to this onion. Here's what to know. DeepSeek is a Chinese tech company that created DeepSeek-R1 to compete with ChatGPT-4 and other large language models (LLMs), like Alphabet's (GOOG -0.05%) (GOOGL -0.02%) Google Gemini and Llama 3 created by Meta Platforms (META -0.40%). But that isn't the headline-inspiring story. DeepSeek "trained" its model with $6 million and just 2,000 somewhat outdated Nvidia (NVDA 1.32%) graphics processing units (GPUs). This is a startling claim when competing programs reportedly cost hundreds of millions of dollars and many thousands of top-shelf GPUs. For example, xAI's Colossus uses 200,000 GPUs, with plans to expand to 1 million. The news crushed Nvidia's stock. It was down more than 20% from its recent all-time high at one point, as investors worried about what this breakthrough would do to GPU demand. But is this breakthrough exactly what it seems? Maybe not. Industry experts have said they believe the actual cost of DeepSeek-R1 is $1.6 billion and that the company has 50,000 Nvidia GPUs. DeepSeek may have exaggerated its triumph because of U.S. export controls on high-powered GPUs, preferring to avoid the ire of regulators, or perhaps to garner more attention. Either way, it doesn't look like the U.S. tech giants will stop buying thousands of Nvidia GPUs anytime soon. Alphabet and Amazon (AMZN -0.32%) announced massive 2025 budgets for capital expenditures (CapEx) on their recent earnings calls. Amazon spent $26 billion in the fourth quarter and expects this to continue in 2025, while Alphabet dished out $14 billion with plans to spend $75 billion in 2025. Much of this will go toward data centers, servers, and GPUs. It was going to be difficult to top Nvidia's incredibly successful fiscal 2024, which featured $61 billion in sales on 126% growth. This was led by staggering growth in data center sales that hit $48 billion on 217% growth. However, fiscal 2025 is also incredible. Through three quarters, sales are $91 billion, led by another massive increase in the data center segment. Even better, operating income through the third quarter of fiscal 2025 is $61 billion. The 67% operating margin, versus 61% in fiscal 2024, shows that demand is accelerating as customers are willing to pay steep prices to obtain Nvidia products. Rather than a disaster, the drop in Nvidia stock caused by DeepSeek looks like a terrific opportunity for long-term investors. As shown below, the forward price-to-earnings (P/E) ratio dropped sharply along with the stock price. As you can see on the chart, the sudden drop in valuation isn't unique. However, it is rare, having happened only once in 2023 and 2024. Both times were excellent opportunities for investors to buy the stock. With DeepSeek's claims in question, Big Tech confirming that capital investments will be robust, and Nvidia's spectacular results and lower-than-usual valuation, long-term investors should consider purchasing the stock now.

Meet the Supercharged AI Stock That Wall Street Says May Rise 30% | The Motley Fool

Artificial intelligence (AI) stocks have helped indexes soar in recent times as investors bet on this industry's ability to drive earnings growth and spark game-changing innovations. Companies developing tools for the AI infrastructure buildout and companies applying AI to their businesses have already started benefiting from this hot technology -- and investors have noticed. One company, in particular, has emerged as a current and future winner. It saw its stock advance 171% last year, leading gains in the Dow Jones Industrial Average. And over the past five years, it's climbed a mind-boggling 1,800%. This performance has followed double-digit and triple-digit increases in the company's revenue quarter after quarter, thanks to demand for its AI products and services. Moving forward, the good times may be far from over, so it's not too late to get in on this AI leader. Below, I'll look at the supercharged AI stock that Wall Street predicts may advance 30% from today's level. This particular company wasn't always an AI giant -- it actually started out serving its technology to the video gaming market. But when it became clear that its top chips were ideal for many other uses, the company expanded its reach. And today, it's the world's No. 1 designer of graphics processing units (GPUs) for AI, and quarterly revenue, which totaled $7 billion three years ago, now tops $35 billion. Seeing this success, investors have piled into this stock. The company is now almost synonymous with the words "artificial intelligence." I'm talking about AI powerhouse Nvidia (NVDA -1.25%). The one problem for Nvidia is that the stock's gains have pushed its valuation higher and have made some investors wonder exactly how long the stock's momentum can continue. Stocks don't rise nonstop forever, so it's logical to imagine Nvidia taking at least a pause at some point. In recent days, investors have gotten a taste of this. Nvidia stock slipped last month after start-up DeepSeek said it trained its model with lower-performance Nvidia chips. This prompted investors to wonder whether top tech companies would scale back their spending on premium GPUs. Still, Wall Street remains optimistic about Nvidia, with the average price forecast of about $172 calling for a 30% increase from today's level over the coming 12 months. Is this a realistic expectation? First, it's important to note that, although the DeepSeek news weighed on Nvidia stock, it's unlikely this start-up's news actually will have any meaningful impact on the company's revenue. Nvidia's top customers -- from Meta Platforms to Alphabet -- have said in recent weeks that they plan on increasing their investments in AI. So it seems very unlikely they'll abandon Nvidia's newest GPUs in favor of older or lower-performing models. Considering Nvidia's stock performance, we could see pullbacks from time to time as investors lock in profits -- and I think this has been the case in recent weeks. It's also true that Nvidia will face some competition from rivals or even in-house chips developed by companies such as Amazon. (Amazon Web Services has developed the Trainium chip for its most cost-conscious customers.) But this is unlikely to weigh heavily on the top chip designer's market share. Nvidia is far ahead when it comes to GPU performance, and its commitment to innovation -- promising to update GPUs annually -- should keep it in the lead. Right now, Nvidia's launch of its Blackwell architecture is unfolding, and demand has far outstripped supply. On top of this, Nvidia should benefit from the next stages of AI development, which involve applying AI to real world problems. Nvidia sells the most powerful chips for inferencing -- and power here is crucial since inferencing involves the reasoning process AI models go through to do their jobs and answer complex problems. And the company also has created a software platform that supports companies as they build and use AI. All of this should keep growth booming at Nvidia. This means that, though Nvidia shares may take a pause here and there, Wall Street's expectations for a double-digit gain in the coming year are reasonable. What's even more important is, over the long term, Nvidia has what it takes to continue dominating the AI market and therefore generating earnings growth. That's great news for investors who buy and hold this top stock today.

Should you scoop up Nvidia stock today? Here's what analysts and market history suggest

There is a popular aphorism, which says that history repeats itself, and that might be the case for stocks as well. According to The Motley Fool, history suggests that now could be an ideal time to buy Nvidia stock hand over fist. While investors remain watchful of Nvidia as the stock had a dip over the last few weeks, with some apprehension possibly brewing because of Chinese AI startup DeepSeek's latest AI model. But anytime Nvidia stock has dropped 10% or more in the past, it presented a fantastic buying opportunity, as per the report. The Motley Fool also mentioned that Nvidia has had an extraordinary rally almost 21 times from early 2020 and is up more than 80% during the last 12 months. Since 2015, Nvidia's stock has been down double digits from its peak almost every year except for one since 2015. According to The Motley Fool, every time it fell, it soared back to new highs. Another pattern which The Motley Fool spotted is that Nvidia tends to move up after every quarterly earnings report. Nvidia has developed a pattern of beating Wall Street estimates, especially since the generative AI boom after OpenAI's launch of ChatGPT. Nvidia's fiscal Q4 earnings will be announced on February 26, 2025, and analysts expect earnings to be up 63% year-on-year. This will be the company's first quarter to report revenue from its powerful new Blackwell chips. According to Nvidia CEO Jensen Huang, Blackwell chips had "insane" demand. Some analysts said that these chips might have been underestimated by Wall Street. Even though Nvidia has previously staged dramatic recoveries, history sometimes might not repeat itself. The rapid changes in the AI ecosystem bring competitive pressures on Nvidia which it hasn't had to deal with before, like the new competition with DeepSeek. The high valuations are another concern, currently trading at 28.5 times its trailing 12-month sales. Should Nvidia's growth slow down, we would be staring at serious selling pressure on the stock. As per analysts, anything that derails that growth would almost certainly cause the stock to tumble. Many investors are concerned that DeepSeek's AI technology could negatively impact Nvidia's growth. Recently, several of Nvidia's biggest customers shared updates on their quarterly performance, and the news was promising. Each of them revealed plans to significantly ramp up their AI investments and focus on expanding their ability to train and deploy AI models, according to The Motley Fool. This shows a growing commitment to AI, which bodes well for Nvidia as a key player in the space. Why has Nvidia's stock recently dropped? Nvidia's stock took a dip recently due to concerns about increased competition, especially from DeepSeek, a Chinese AI startup. DeepSeek's low-cost AI model caused investors to worry about a potential slowdown in demand for Nvidia's GPUs. Has Nvidia always bounced back after a drop in stock price? Yes, historically, whenever Nvidia's stock has dropped by 10% or more, it has eventually rebounded to new highs. This pattern has held true nearly every year since 2015, with one exception.

Nvidia's Insiders Are Speaking Volumes With Their Trading Activity -- but Are You Listening? | The Motley Fool

Nvidia's insiders have made a statement by not making an open-market purchase for 50 consecutive months (and counting). Optimists have had every reason to smile over the last two-plus years. Since the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite bottomed out in October 2022, the bulls have been in firm control on Wall Street. Recently, all three indexes worked their way to record-closing highs. Though catalysts have been abundant and include Donald Trump's return to the White House, stock-split euphoria, and better-than-expected corporate earnings, the primary wind in Wall Street's sails has been the rise of artificial intelligence (AI). The ceiling associated with AI is astronomically high. Giving software and systems the ability to reason, act, and evolve over time, all without the need for human intervention, is a potential long-term game-changer for most industries around the globe. It's why the analysts at PwC believe artificial intelligence will add $15.7 trillion to the global economy by 2030. While there have been dozens of direct and ancillary beneficiaries of the AI revolution, no company is the face of this movement more than Nvidia (NVDA -0.58%). When the curtain closed on 2022, Nvidia was a $360 billion tech stock known best for its graphics processing units (GPUs) used in PC gaming and cryptocurrency mining. Less than two years later, it had gained more than $3 trillion in market value and (briefly) became Wall Street's largest publicly traded company. Nvidia's ascension has everything to do with its Hopper (H100) GPU and next-generation Blackwell GPU architecture, which are enabling the training of large language models (LLMs) and powering generative AI solutions. Orders for the company's hardware are backlogged, with CEO Jensen Huang referring to demand for Blackwell as "insane" back in October. Having a superior product, in terms of computing speed, and having demand for that product overwhelm supply, is an envious position to be in. AI-GPU scarcity has allowed Nvidia to charge a 100% to 300% premium to competing AI chips, which in turn has pushed its gross margin into the stratosphere. Nvidia is having success beyond its AI hardware, as well. The company's CUDA software platform, which is used by developers to build LLMs and maximize the computing potential of their GPUs, is helping to keep clients loyal to its ecosystem of products and services. With enterprise AI spending still in its infancy and no other chipmakers particularly close to matching the computing potential of the Hopper or next-gen Blackwell GPU, Nvidia would appear to be ideally positioned for the future. But if investors pay close attention to what Nvidia's insiders are up to, they might change their tune. One of the best aspects of putting your money to work on Wall Street is that it's more transparent than it's ever been. With a click of a button, investors have instant access to operating results, balance sheets, management commentary, and investor presentations. Additionally, investors can track the purchasing and selling activity of Wall Street insiders, which represent the high-ranking executives and board members of publicly traded companies. Insiders are required to file Form 4 with the Securities and Exchange Commission within two businesses days following a transaction date. On Dec. 3, 2024, Nvidia hit a dubious milestone. This marked exactly four years since the last insider purchased shares of the company on the open market. In this case, it was Chief Financial Officer Colette Kress's two children who were the beneficiaries of respective 100-share purchases, per the Form 4 filing. In the four years and two months that have followed, 161 Form 4s have been filed, all of which were insider sales totaling an aggregate of $3.4 billion. To be fair, not all insider selling activity is necessarily nefarious. A lot of high-ranking executives receive the lion's share of their compensation in the form of vested shares and stock options. Insiders need to execute their options contracts before they expire and might choose to sell shares of their company to cover their federal and/or state tax liability. Then again, 161 dispositions to 0 acquisitions over a span of 50 months is a pretty telling story. If the company's own management team and board of directors don't view their stock as a bargain, why should investors? Companies on the leading edge of a next-big-thing innovation being in a bubble is nothing new. Dating back to the advent of the internet in the mid-1990s, every game-changing technological innovation has navigated its way through an early stage bubble. With most businesses lacking a clear game plan with their AI investments, there's a good chance we're witnessing history rhyme, once more. Nvidia's valuation is also consistent with previous bubbles. Prior to the bursting of the dot-com bubble a quarter of a century ago, Amazon and Cisco Systems peaked at roughly 40 times their trailing-12-month (TTM) sales. Perhaps uncoincidentally, Nvidia topped out around 42 times TTM sales last summer. Even with Nvidia possessing well-defined competitive advantages in AI-accelerated data centers, the persistent selling by insiders and complete lack of buying points to Nvidia stock being richly valued.

Nvidia stock is doing something it's done only twice before; what's coming next? Is history about to repeat itself?

Nvidia has been one of the best stocks in recent times, with the stock jumping 171% last year to make it one of the top performers in the Dow Jones Industrial Average, as per reports. But recently, Nvidia has retreated from its highs and has done something it's only done twice before in the past four years, reported The Motley Fool. The centre of Nvidia's success is the company's dominance in the artificial intelligence (AI) market. AI is poised to expand from a $200 billion industry currently to more than $1 trillion within the next decade, as per The Motley Fool. Nvidia provides the chips and software vital for training AI models and powering their use in the real world, so the company is right at the forefront of AI's ascendance. Nvidia's top line has been on fire, with the company reporting stunning double and triple-digit growth in recent quarters. Its stock price has followed suit, shooting to new heights. But over the past few weeks, the stock has fallen below the valuation of 30x forward earnings, something that has happened only twice over the past four years, according to The Motley Fool. Traditionally, these declines have been followed by huge comebacks, with Nvidia's stock shooting up in the subsequent months, as per the report. Nvidia's stock fall might be a temporary blip in what has otherwise been an extraordinary growth story, as per the report. With its market leadership in AI, high profitability, and dedication to innovation (such as its recent Blackwell GPU launch), Nvidia has a strong foundation to continue succeeding. The company is also continually updating, with ongoing updates to its products that enable it to stay ahead of its competitors. Although history might not repeat itself, Nvidia's financial strength, market position, and focus on innovation, are the three elements that should deliver growth and stock performance over the long haul, according to The Motley Fool. Why did Nvidia stock drop recently after such a huge surge? It's normal for stocks to fluctuate, even ones with a strong track record like Nvidia. After a huge run-up in its stock price, Nvidia experienced a pullback, as per the report. But history shows that similar dips in the past were followed by significant rebounds, especially with the company's strong position in AI and its continuous innovation, reported The Motley Fool. Should I buy Nvidia stock right now? According to The Motley Fool, Nvidia's position in AI, revenue growth, and focus on innovation, make it an attractive option for long-term investors.

Nvidia Stock Investors Just Got Great News From TSMC | The Motley Fool

Good news has been difficult to come by for Nvidia (NVDA 3.16%) investors lately, which is evident from the roughly 10% decline in the company's stock price in the past three months. The once high-flying artificial intelligence (AI) chip stock has been weighed down by multiple headwinds despite delivering outstanding growth and guiding above expectations when it released its latest quarterly results in November last year. From concerns about a slowdown in its growth on account of weakening AI chip demand to intensifying competition to export-related restrictions to the recent breakthrough claimed by Chinese start-up DeepSeek, a number of factors outside of Nvidia's control have pulled the stock down. However, Taiwan Semiconductor Manufacturing's (TSM -2.21%) sales data for January 2025 suggests that investors' concerns about the health of AI chip demand and Nvidia's performance may be overblown. Let's see why that may be the case. Nvidia is a fabless chipmaker, which means that it doesn't own any fabrication plants and simply designs chips. The manufacturing is done by TSMC, the world's leading semiconductor foundry that fabricates chips for fabless chipmakers and consumer electronics companies. That's why the 36% year-over-year jump in TSMC's revenue last month is an indicator that the demand for Nvidia's AI chips hasn't waned. More importantly, TSMC reported revenue growth of 58% and 34% in the final two months of 2024. As Nvidia's fiscal fourth quarter of 2025 coincides with these three months, there is a solid chance that the chipmaker could exceed Wall Street's expectations when it releases its results later this month. Of course, Nvidia is not the only customer that TSMC has. However, it is worth noting that Nvidia was reportedly TSMC's second-largest customer in 2023, accounting for 11% of the latter's revenue. Also, recent developments indicate that Nvidia's share of TSMC's revenue may have increased. For instance, Apple, which was TSMC's biggest customer in 2023, noted a 4% year-over-year decline in iPhone shipments in the fourth quarter of 2024. So, it is likely that TSMC may have produced more chips for Nvidia in the past three months, and that could translate into stronger sales growth for the latter. Another thing worth noting here is that TSMC is expected to increase its advanced packaging capacity this year by around 85% to a range of 65,000 to 75,000 wafers per month to meet the robust demand for AI chips. Nvidia is expected to get its hands on 63% of this increased capacity. Rivals such as Broadcom and Advanced Micro Devices are projected to be distantly placed in second and third positions with 13% and 8% share, respectively. All this indicates that Nvidia's AI chip supply chain is likely to get stronger in 2025. Throw in the fact that major cloud computing providers such as Meta Platforms, Microsoft, Alphabet, and Amazon are set to raise their capex substantially this year, and Nvidia's improved supply chain could help it fulfill more orders and sustain its impressive growth. These four tech giants are set to raise their combined capital expenses by 46% in 2025 to a whopping $325 billion as they will continue to spend more money to build out AI infrastructure. The discussion above makes it clear that Nvidia is on track to benefit from a favorable AI chip demand environment. At the same time, the company's focus on bolstering its supply chain to fulfill more demand and the terrific increase in TSMC's revenue of late provide further indication that Nvidia should be able to sustain its healthy growth rate this year. Analysts expect a 52% jump in Nvidia's revenue to almost $196 billion in the new fiscal year (which has just begun). However, don't be surprised to see Nvidia exceeding that mark, as the incremental capital spending of $102 billion by big tech players in 2025 is going to be higher than the roughly $83 billion incremental spending last year. Nvidia is in a terrific position to corner the lion's share of this increased capital spending as it is expected to control 85% of the AI chip market this year. As such, a stronger-than-expected showing from Nvidia seems in the cards when it releases its fiscal 2025 fourth-quarter results on Feb. 26, and that could be just the catalyst that this AI stock needs to regain its mojo.

1 Metric That Still Suggests Nvidia Is a Steal of a Deal | The Motley Fool

Nvidia (NVDA 2.63%) stock has been losing steam of late. Entering trading on Tuesday, shares of the popular chipmaker were in negative territory for the year, down a little under 1%. It's still early in the year, but for a stock that generated 171% gains in 2024, the slowdown is noteworthy. It remains one of the most valuable companies in the world with a market cap of around $3.3 trillion, but despite its high valuation, there's a case to be made that Nvidia may still be a great buy. And based on one metric, it may even be a steal of a deal right now. A multiple that investors often use to value stocks is the price-to-earnings (P/E) ratio. That tells you how expensive a stock is in relation to its profitability, on a per-share basis. But P/E multiples can vary based on how much growth a business is generating and the sector that it's in. Nvidia's P/E multiple is more than 50, which seems high, but it may be justifiable if you're expecting a lot of growth from the business down the road. This is where a multiple such as the price/earnings-to-growth ratio, or PEG, comes in handy. It factors in analyst expectations for future growth. If the PEG ratio is around 1 or less, that's generally an indicator it's a great buy based on expected growth. According to data from Yahoo! Finance, Nvidia's PEG ratio, based on its expected growth rate for the next five years, currently sits at 0.96, suggesting that is a deal given the current outlook from analysts. Based on its low PEG multiple, it may be tempting to think that Nvidia still has a lot more upside. And it might, over the long term. But the PEG ratio relies on analyst estimates, which may change over time. And changes could happen soon, especially amid growing questions about whether tech companies are investing too heavily into artificial intelligence (AI). Investors appear to be growing concerned about tech spending due to the emergence of the DeepSeek AI model, which is supposedly as effective as ChatGPT but costs significantly less. And if that's the case, investors may be wondering whether all those Nvidia chips are truly necessary for AI development. Nvidia's massive growth in recent years has been a key reason investors have remained bullish. And if a slowdown does happen, that could very well impact the stock, potentially resulting in a sell-off. Investors will get a better idea of how strong demand is when Nvidia reports its earnings later this month, and that could ultimately dictate how hot of a buy the stock is in the weeks ahead. Nvidia has become one of the leaders in tech and it's a solid investment to buy and hold. Over the trailing 12 months, it has generated more than $63 billion in profit on sales of $113 billion. Those are fantastic margins, which give the company plenty of flexibility to lower prices or use those profits to invest in new growth opportunities. And that's why even if there is a slowdown in tech spending, the stock may still be in excellent shape over the long run as the business has the financial power to adapt to changing market conditions. There may be volatility in the next year or two if the hype in AI cools, especially since Nvidia's stock has become synonymous with AI-related developments. However, as long as you're willing to hang on for several years and potentially ride out the short-term volatility, it may not be too late to invest into this top tech stock right now.

Are Tech Giants (Including DeepSeek) About to Say 'Checkmate' to Nvidia? | The Motley Fool

Nvidia (NVDA 2.63%) has been a clear winner of the artificial intelligence (AI) revolution so far. The company has become the leading AI chip designer, holding about 80% of the market. Nvidia makes the world's most powerful graphics processing units (GPUs) -- these are the chips crucial for major AI tasks like the training and inferencing of models. The biggest technology companies have flocked to Nvidia for these much-sought-after GPUs to power their AI projects, and that's resulted in double- and triple-digit revenue growth for Nvidia quarter after quarter. And this revenue has reached record levels, with Nvidia reporting more than $35 billion in the most recent period. On top of this, Nvidia is highly profitable on sales, with gross margin exceeding 70% on an ongoing basis. But one particular risk has attracted investors' attention in recent times -- a risk that's intensifying and could potentially hurt revenue growth. It's linked to actions taken by some of Nvidia's customers. Are these tech giants about to say "checkmate" to Nvidia? Let's find out. First, let's talk about Nvidia and its customers. Nvidia sells a variety of products and services to AI customers, but a point of focus has been on the company's GPUs. As mentioned, they're the most powerful -- and at $30,000 a pop, the most expensive -- out there right now. And Nvidia has pledged to update them on an annual basis, a move that could keep the chip designer ahead in terms of technology and quality of product. Nvidia doesn't reveal the names of its biggest customers, but by considering comments from some of the world's major tech companies, we can identify them. Companies from Amazon to Meta Platforms and OpenAI have spoken of their use of Nvidia chips. For example, a year ago, Meta predicted that by the end of 2024, it would have 350,000 of Nvidia's H100 GPUs on board. Another example: Oracle co-founder Larry Ellison said a few months ago that he and Tesla chief Elon Musk "begged" Nvidia for more chips -- this is understandable, considering demand for the company's latest Blackwell architecture and chip has surpassed supply. So, it's clear that tech giants have been turning to Nvidia to power their projects since the start of the AI boom. Now, let's consider the move that could represent a risk for the chip leader. It has to do with competition, but not from rivals we would expect such as fellow chip designers Advanced Micro Devices or Intel. Instead, this competition comes from the research and development departments of Nvidia's customers. Many have been producing their own chips, either as a way to reduce their dependence on Nvidia or to offer their customers access to lower-priced chips. Amazon has developed the Trainium line of chips and sells them to its cost-conscious customers through its Amazon Web Services business. Meta said during its recent earnings report that it's "pursuing cost efficiencies" by deploying its MTIA chip in ranking and recommendation inference workloads for ads and organic content. And just recently, Reuters reported that OpenAI is finishing up designs for its own AI chip and expects to launch the manufacturing stage in the coming months. Finally, Chinese start-up DeepSeek's report last month that it trained its model with Nvidia's lower-performance chips could reinforce the idea that companies may not always need to invest a fortune to get the job done. If we consider these moves by tech giants, it may look as if they are about to say "checkmate" to Nvidia -- leaving the chip leader with slower revenue growth as these players turn to lower-cost chips, and in many cases, those they've developed in house. But before we call this chess game over and declare Nvidia the loser, it's important to consider the whole picture. Yes, these Nvidia customers are expanding their chip options. But I don't necessarily think this will hurt growth at Nvidia. Here's why. First, tech giants are looking for excellence so clearly will seek the best -- and so far that's Nvidia -- to propel their AI programs. So, they may deploy Nvidia's latest GPUs for the most crucial of tasks and let some of their own chips play supporting roles. And it's in a customer's best interest to build on their current Nvidia system in order to reduce total cost of ownership over time. It's also important to remember that Nvidia doesn't sell only GPUs but a whole ecosystem of products and services to advance AI projects. So, the company's revenue doesn't depend on GPUs alone. And as the AI revolution moves into the next stages, Nvidia's revenue opportunities actually could expand -- for example, more companies may turn to Nvidia's Enterprise software offerings. All of this means that Nvidia has plenty of potential moves on the chess board, and ones that could ensure revenue growth and share performance as this AI boom continues.

Where Will Nvidia Stock Be in 10 Years? | The Motley Fool

Long-term investing is the key to sustainable returns in the stock market because it smooths out short-term volatility and allows a company's fundamental value to shine through. Tech giant Nvidia (NVDA 2.63%) has been at the forefront of generative artificial intelligence (AI) growth. But as the hype inevitably fades and new opportunities like robotics and self-driving cars potentially have their turn in the sun, how will Nvidia respond? With roughly 88% of revenue ($30.8 billion) coming from its data center segment, Nvidia is very overexposed to the market for generative AI hardware. This under-diversification puts the tech giant in a perilous position, especially as clients continue to lose money on their AI projects and new low-cost rivals like China's DeepSeek cause shareholders to question the industry's long-term profit potential. The growing popularity of custom chips also allows key AI clients like OpenAI to bypass Nvidia and design their own hardware through partnerships with fab companies like Taiwan Semiconductor Manufacturing. But while generative AI now dominates Nvidia's narrative, it wasn't always like this. The company has a history of shifting focus to tackle emerging trends. As recently as fiscal 2022, video game and crypto mining hardware (Nvidia's gaming segment) represented around 46% of total sales ($12.46 billion) compared to just 9.4% today as AI-related growth has overshadowed these once crucial opportunities. Nvidia's rapid business transformation highlights the versatility of its core technology, the graphics processing unit (GPU), a type of computer chip that uses parallel processing to perform multiple calculations simultaneously. And over the next 10 years, investors should expect GPUs to continue finding new uses, even if demand related to generative AI slows down. Robotics and autonomous vehicles look promising. According to analysts at McKinsey & Company, autonomous driving could create $300 billion to $400 billion in revenue by 2035 as automakers take advantage of the technology for software as a service (SaaS). And just like generative AI, self-driving cars need to process large amounts of data quickly and accurately, making this industry a potential gold mine for Nvidia and its industry-leading GPUs. Tesla is a good example of the potential scale of the opportunity. Despite not offering a well-known generative AI large language model (LLM), the automaker is one of Nvidia's key customers. It is accumulating tens of thousands of GPUs to build its Dojo supercomputer, which is designed to be the brain behind its full self-driving (FSD) platform. Nvidia also positions itself to play a direct role in the automotive industry through software like its Drive AGX, designed to synergize with its hardware to enable self-driving functions and process driving data. As of the third quarter, Nvidia's automotive and robotics segment generated sales of $449 million. While this is a drop in the bucket compared to its total revenue of $35 billion, the segment grew by an impressive 72% year over year. And investors can expect that increase to accelerate over the coming decade. The generative AI boom is getting long in the tooth, and demand for Nvidia's GPUs may eventually slow as companies look for cheaper alternatives. However, over the long term, new opportunities like robotics and self-driving cars could pick up the slack. That said, it is not a good idea to buy Nvidia at the height of its current hype cycle. Investors may want to wait for more information before considering a position in the stock.

Nvidia not slowing down! DeepSeek breakthrough set to propel its GPUs to new heights; here's why

Nvidia has come through a fantastic journey this past year, and although it has lost some momentum after Chinese AI startup DeepSeek launched its latest AI model, the near future is brighter for the chipmaker, according to Tiger Brokers market strategist James Ooi. While the general perception is that DeepSeek would undermine the demand for Nvidia's high-performance graphical processing units (GPUs), but according to the market strategist, the opposite seems to be the case. He claimed that demand for Nvidia's high-performance GPUs will increase, reported TipRanks. According to Ooi, DeepSeek's lower computing power needs could open up more AI opportunities, ultimately benefiting Nvidia and other AI-related stocks. Nvidia's stock took a hit after DeepSeek's debut, but now investor sentiment has started to recover and its stock appears to be on an upward path. Nvidia's stock is up 85.53% over the last year, as per reports. Yet the problem does not end here as there are still fears of competition. According to TipRanks, AI companies like Microsoft-backed OpenAI are developing their own chips. OpenAI has even finalized the design of its first custom chip. According to TipRanks, the consensus rating among Wall Street analysts for Nvidia is Strong Buy, based on 38 buy ratings and three hold ratings assigned in the last three months. The mean price target is set at $178.71, while the high and low targets are $220 and $135, respectively, meaning a potential upside of 33.39% for the stock. What was the main factor that caused Nvidia stock to fall? Nvidia share prices plunged with the introduction of DeepSeek's latest AI model because investors fretted that this development would lower the demand for Nvidia's most powerful GPUs. What did James Ooi say about Nvidia's future prospects? James Ooi, a market strategist for Tiger Brokers, claimed DeepSeek's lower computing power requirements will benefit Nvidia. He laid emphasis on DeepSeek's potential for wider AI applications, which in turn will boost the demand for Nvidia's GPUs.

Chip-Demand Optimism Lifts Nvidia Stock

Colin is an Associate Editor focused on tech and financial news. He has more than three years of experience editing, proofreading, and fact-checking content on current financial events and politics. He received his M.A. in journalism from The New School and his B.A. in history and political science from McGill University. Nvidia (NVDA) stock was up about 3% in intraday trading Thursday amid optimism about strong demand for its artificial intelligence chips. The stock, up less than 1% so far this year, has had a difficult start to 2025. Nvidia lost nearly $600 billion in market capitalization in a single day late last month when a low-cost AI model from Chinese start-up DeepSeek shocked Wall Street and raised doubts about future demand for Nvidia's most advanced (and expensive) chips. Some analysts were quick to call the DeepSeek sell-off overblown and reiterate their bullish views on Nvidia and other AI stocks. Global shipments of AI servers are expected to grow nearly 30% this year, according to research firm TrendForce. That would be a slowdown from the 46% growth recorded last year, but Nvidia is expected to remain the leader in the space. HP Enterprise (HPE) on Thursday said it had shipped its first Nvidia Blackwell family product, an Nvidia GB200 NVL72. Blackwell, Nvidia's most sophisticated line of chips, has faced some setbacks but, as the most advanced offering on the market, is expected to be in demand this year. Morgan Stanley analysts, in a note late Wednesday, argued the market currently underappreciates the value of Nvidia's offering compared with nascent ASIC -- or custom silicon -- offerings. Nvidia chips, they said, generally offer a better cost-performance ratio than custom silicon from the likes of Amazon (AMZN) and Google (GOOG). As such, their base case was that Nvidia would retain its dominant market share. The greatest risk to the stock, they said, was the possibility DeepSeek would prompt the U.S. to enforce tighter semiconductor export controls.

Nvidia A Strong Buy With 42% Upside, Says Analyst Predicting 'Positive Report And Outlook' Ahead Of Earnings Buy Nvidia Stock Ahead Of Its Upcoming Earnings, Suggests Evercore ISI. Predicts 'A Positive Report And Outlook.' - NVIDIA (NASDAQ:NVDA)

In the lead-up to Nvidia Inc.'s NVDA forthcoming earnings report after market close on Feb.26, Evercore ISI suggests that it is a good buying opportunity amid strong fundamentals. What Happened: In a client note on Sunday, analyst Mark Lipacis and his team at Evercore ISI added the chip giant to its 'tactical outperform' list. The firm has a $190 price target on the stock with a 'Buy' rating, suggesting an upside of nearly 42% from yesterday's close, CNBC reported. Analysts at Evercore ISI stated that the worries about demand for Nvidia's microchips and processors following the DeepSeek launch are exaggerated and that the company is likely to deliver "a positive report and outlook" in its upcoming fourth-quarter earnings. It considers the DeepSeek-led sell-off as a significant buying opportunity for Nvidia stock. Evercore analysts stated that the industry continues to believe in Nvidia's software innovations, including NIMS and NeMo. These innovations will sustain the demand for its GPUs by providing enterprises with flexibility across cloud providers and on-premises deployments while simplifying the development and deployment of Large Language Models (LLMs). Additionally, advancements like LiquidAI, which enable model training during inference, highlight the importance of programmable platforms such as Nvidia's GPUs. SEE ALSO: Alibaba Cloud's Growth Accelerates With AI, Analyst Weighs DeepSeek's Rising Competition Why It Matters: This recommendation comes days after Nvidia saw a $600 billion sell-off in a single day, triggered by the release of a new Large Language Model (LLM) by DeepSeek operating on older-generation Nvidia chips. This development has raised questions about the future of AI technology and Nvidia's role in it. To add to this, reports of OpenAI developing custom chips in-house to move away from Nvidia present a fresh challenge for the chip giant. "Longer term, we view the risk of custom-AI chips taking share as the biggest risk, however, the recent checks suggest that this risk is nominal, at least in the near-term," clarified Mark Lipacis and team. Besides Evercore ISI, Morgan Stanley maintained this stance on Nvidia being in the list of its "Top Pick," last week. While the firm acknowledged that DeepSeek presented near-term headwinds, its long-term outlook for Nvidia remained intact. The analysts at Morgan Stanley also noted that stabilizing demand for Nvidia's Hopper chips and improved supply of Blackwell would be favorable for the company. According to ratings from 40 analysts, tracked by Benzinga Pro. NVIDIA Corp has a consensus price target of $172.28. However, the latest forecasts from Morgan Stanley, Tigress Financial, and Cantor Fitzgerald place the average price target at $190.67, suggesting a potential 42.93% upside for the stock. READ MORE: Data On DeepSeek May 'Be Somehow Weaponized Against The United States' - Suze Orman Says The AI App Faces Similar Fate As TikTok Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$133.480.51%Overview Rating:Good75%Technicals Analysis1000100Financials Analysis600100WatchlistOverviewMarket News and Data brought to you by Benzinga APIs

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

Maybe you've been letting extra cash accumulate in an online savings account that's paid a decent interest rate. Or you stashed an end-of-year bonus to buy some stock when the market pulls back. The S&P 500 surged higher by more than 20% for two consecutive years now, so the thought of getting in at these lofty levels might be nerve-wracking. But with rates in those savings accounts starting to drop, it may be time to pull the trigger. And you want to be aggressive with this money. You can afford to if you're young, or even just have other buckets with more conservative investments. The fast-growing artificial intelligence (AI) sector is where you think this money should go. That makes sense, as it may still be in its infancy stage and has massive potential to transform how companies do business. Like many others, you might think both Nvidia (NVDA -1.25%) and Palantir Technologies (PLTR 4.24%) have plenty more potential, even after both stocks rocketed higher. Nvidia captured most of the headlines in the last year or two, but it might surprise investors to find out that Palantir stock outpaced Nvidia's returns by a wide margin. Palantir grew quickly by offering AI software platforms that help manage and secure data for user- and machine-assisted analysis. Its applications expanded from the military to include commercial customers as well. Palantir stock rocketed more than 750% in the last three years. Of course, Nvidia stock also provided a market-thrashing return of 425% in that time thanks to its AI hardware and software offerings. But Palantir is currently the hot stock, with much of that three-year return coming in just the last 12 months. That's because the company is quickly growing sales at a time when much focus is on improving efficiencies and problem-solving in U.S. government agencies, law enforcement agencies, financial institutions, and commercial enterprises. All of these are part of Palantir's customer base. Palantir and Nvidia are high-growth tech stocks. Yet it's fair to question whether Palantir is growing fast enough to justify its recent stock surge. Sales increased 29% year over year in 2024. And the rate of growth is increasing, too. Management predicts 2025 revenue will grow 31% versus last year. It's profitable growth as well, with an operating profit margin of 39% for full-year 2024. But Nvidia is still growing even faster. That's impressive for what is a much larger company. Nvidia's market cap of almost $3.2 trillion compares to $250 billion for Palantir. Nvidia is scheduled to report its fiscal fourth-quarter earnings on Feb. 26. Using management's guidance, though, revenue for the fiscal year ending in late January 2025 will show growth of about 110% year over year. Maybe more importantly, Nvidia shows sequential quarter-over-quarter revenue growth in the high teens over the last six months. Palantir's quarter-over-quarter sales growth accelerated to 14% in its most recent quarter. It might continue to accelerate, but by some metrics, Palantir's valuation dwarfs that of Nvidia. Palantir's forward price-to-earnings (P/E) and price-to-sales (P/S) ratios are a mind-boggling 200 and 67, respectively. Compare that to just about 30 and 16, respectively, for Nvidia. Nvidia's sales are predicted to continue to grow thanks to its AI-focused chips. The company also created an ecosystem of related software that keeps its AI solutions in high demand. But even if its growth rate slows more than market watchers anticipate, the stock is still a better value than Palantir. And while Nvidia's data center segment is the focus of its growing sales, servers and compute power aren't the only places where its technology will be used. Nvidia will benefit if self-driving vehicles and robotics become more mainstream. While sales in those areas pale in comparison to data centers, it could be the next growth catalyst for Nvidia. Palantir has great potential as a business and also as a stock investment. And investors with a tolerance for risk and stress may want to invest in the AI software company in stages. But Nvidia also still has much more potential for growth. It's also trading at a much lower valuation than Palantir. That should lead to better returns in the near- and mid-term. That makes it the better AI stock to buy now.

Wall Street bets big on Nvidia but is Blackwell a ticking time bomb?

Nvidia (NASDAQ:NVDA) stock has risen significantly due to robust demand for its leading AI chips, giving the company a commanding market share exceeding 80% in the AI chip sector. Despite its leading position, Nvidia faces investor concerns as the stock struggles to gain traction this year amid uncertainties about its upcoming Blackwell GPU architecture. Initially scheduled for mass production in the fourth quarter of 2024, reports indicated that Blackwell encountered a design flaw. Nvidia claimed to have rectified the issue, but subsequent reports suggest that major customers are deferring their orders due to overheating issues associated with the Blackwell GPUs. The delay in the Blackwell rollout contributed to a significant revision in Super Micro Computer's (NASDAQ:SMCI) fiscal year 2025 revenue forecast, which is now $3.75 billion lower than previous guidance. Super Micro's management indicated they have yet to receive an allocation for the GB200 chips. Analyst KC Rajkumar from Lynx Equity raised concerns regarding Nvidia's assertions at the Consumer Electronics Show (CES) last month, where the CFO stated that "all is on track" and mentioned collaboration with partners on liquid cooling. Rajkumar noted the contradiction presented by Super Micro, a leader in liquid cooling technology, who reported a lack of GB200 allocations, suggesting potential further delays in Blackwell shipments. During Super Micro's June quarter earnings call, management expressed uncertainty about whether Blackwell would ship in the December quarter. As of the March quarter, they still lack visibility regarding the availability of the GB200, leading Rajkumar to conclude that Super Micro's management appears to have removed Blackwell from their fiscal year 2025 revenue outlook, which presents negative implications for Nvidia. Super Micro dodges delisting: Can it regain Wall Street's trust? Nevertheless, the consensus on Wall Street remains predominantly positive regarding Nvidia. The stock currently holds a Strong Buy consensus rating, supported by 37 Buy recommendations and only 3 Hold ratings. The average price target is $178.86, indicating potential 12-month returns of 32%. In a striking turn of events, Super Micro forecasts $40 billion in sales by fiscal 2026, surpassing Wall Street's estimate of $30.7 billion. This ambitious target is driven by an increased demand for AI-optimized servers, particularly those utilizing Nvidia's upcoming Blackwell B200 chips. However, Super Micro has revised its fiscal 2025 revenue target down to $24.3 billion, from an initial $28 billion, following missed sales and profit estimates in its latest quarterly report. Despite regulatory challenges, Super Micro's stock experienced a 7.4% increase recently, amid a $700 million convertible notes offering aimed at funding expansion and enhancing their AI infrastructure. The company is also addressing regulatory scrutiny, including a compliance deadline from Nasdaq after failing to file its annual financials. The U.S. Department of Justice and SEC are investigating, although an independent review found no evidence of misconduct, leaving lingering questions about governance and transparency.