Nvidia's Stock Dip Presents Buying Opportunity Amid AI Boom and Market Concerns

1 Unstoppable AI Stock That Could Skyrocket When the Market Comes to Its Senses | The Motley Fool

The market is in a bit of a weak spot right now, with fears of a trade war erupting. The market is uncertain, which is why many stocks have taken a hit over the past few days. This has caused some incredible bargains to open up, including one of the top stocks over the past two years: Nvidia (NVDA -4.13%). The market has sold off Nvidia stock to ridiculous levels, and when the market comes to its senses, this stock could easily come roaring back. As a result, I think investors need to take every opportunity during this sell-off to load up on Nvidia shares, as the price is almost too good to be true at this point. Nvidia makes graphics processing units (GPUs) and the infrastructure to support their usage, like its CUDA software. GPUs have become vital in today's world because of their ability to compute in parallel. Plus, these GPUs can be connected in clusters to further amplify their computing power, making them a go-to choice when tackling tasks requiring a huge amount of computing power. Artificial intelligence (AI) has been the biggest user of GPUs to date, and the demand for Nvidia's GPUs has been insatiable. Many of the big tech companies have announced record capital expenditure spending for 2025, and a large chunk of that will go to Nvidia. All of them see the industry increasing its AI use, so they are loading up on GPUs, which benefits Nvidia. This would point to another year of strong growth for Nvidia, but some investors are worried that tariffs could throw Nvidia off of its trajectory. When Nvidia's management was asked about what the effect of a tariff would be, they weren't sure because they didn't know exactly what the U.S. government was planning. Most of Nvidia's components come from Taiwan, which seems to have sidestepped tariff threats after Taiwan Semiconductor Manufacturing announced multiple new facilities to be built in the U.S. ($100 billion worth), which will eventually shift Nvidia's supply chain from Taiwan to the U.S. While Nvidia may not be directly affected by tariffs, the prevailing fear is that tariffs will harm the economy, causing overall spending to decrease, which could cause companies to cut their discretionary spending. However, I'd argue that Nvidia GPUs aren't really discretionary spending. Increasing AI computing power (or cloud computing capacity) is basically table stakes for operating in tech right now. While observers will need to see how this thesis plays out, I think these fears and how they affect Nvidia are way overblown. After all, Nvidia issued incredibly strong guidance for the first quarter despite knowing that tariffs were coming in some fashion. For Q1 of fiscal year 2026 (ending around April 30), Nvidia expects revenue of $43 billion, up 65% from last year. That's huge growth for Nvidia, and investors should be fairly confident that this trend will continue as the AI arms race continues. For FY 2026, Wall Street analysts expect revenue growth of 56%, bringing Nvidia's revenue to more than $200 billion. Investors are getting wrapped up in the short-term news headlines about trade wars. Over the long term, the AI buildout will have a much stronger effect. As a result, I'm focusing on where the industry is moving five years from now, not five days from now. By doing this, it allows me to see how much of a bargain Nvidia's stock has become. At 40 times trailing earnings and 26 times forward earnings, Nvidia's stock is nearing dirt cheap levels, especially considering its strong growth rate. Nvidia has a lot going for it, with only headline fears working against it. As a result, this is a perfect opportunity to load up on shares -- as long as you have your eyes on a five-year time frame, not the short term.

Artificial Intelligence (AI) Adoption Rates Appear Low, but This AI Leader Could See a Massive Surge in Demand in the Next 3 Years. Here's Why. | The Motley Fool

In a matter of years, the share price of Nvidia (NVDA 1.92%) has made it one of the largest companies in the world, with a market cap that currently exceeds $3 trillion. Nvidia isn't alone, either. Many other AI stocks are exploding in value. But is Nvidia stock still a buy? According to new research by The Motley Fool on AI adoption rates, the answer is a resounding yes. The statistics cited below could be surprising to many. You're probably well aware of the AI craze occurring right now. But what you might not realize is that the revolution is just getting started. This is going to be a decades-long process, creating huge buying opportunities for early investors who remain patient. Just take a look at some of the adoption statistics compiled by The Fool in its recent report. The current adoption rate of AI for U.S. business stands at just 6.8%. But the technology's projected usage rate over the next six months is 9.3% That's a 37% increase in just six months! Yet even after that expected growth, total adoption of AI would remain under 10%. "Those numbers might appear low given how AI is often discussed as a game changer for businesses," the report reads. But that's exactly the point. For as much as artificial intelligence is talked about today, its actual adoption remains quite low. Rapid growth should change that story quickly, but this will take many years, if not decades, to fully play out. The Fool isn't alone in its findings. According to research from global consultancy McKinsey, the AI market in 2040 will be tremendously larger than it is today. The numbers aren't even close. The firm's low-end estimate has AI software and services revenue jumping from $85 billion in 2022 to $1.5 trillion in 2040. On the higher end, the industry's revenue could eventually reach $4.6 trillion! Looking at generative AI alone, McKinsey expects $2.6 trillion to $4.4 trillion in added economic growth stemming from the technology's adoption by businesses. This is going to be a growth opportunity like few others in history. But does that make a stock like Nvidia a buy right now? The answer may be surprising. Identifying a growth market is different than investing in one. That's because stocks with big potential are priced accordingly. So, while the underlying growth rate may be impressive, the valuation you pay for it may offset most of that growth. Right now, Nvidia is in a curious position. For a multitrillion-dollar company, it's surprising to see its price-to-sales multiple (P/S) so high at 21.6. Yet its revenue is clearly on a huge growth trajectory. And given the statistics discussed above, it's reasonable to expect Nvidia to continue this for decades to come. Growth stocks like Nvidia are notoriously volatile over the short term. Earlier this year, it had hundreds of billions of dollars shaved off its market cap due to an industrywide correction. A sudden rebound at any time is just as likely. But investors seeking to capitalize on rising AI adoption rates shouldn't worry about short-term volatility. And due to Nvidia's dominance in AI graphic processing units -- fueled by early investments, strategic decisions like the 2006 launch of its CUDA developer suite, and a focus on controlling both the software and the hardware ends of the supply chain -- the company has the potential to sell into a rapidly growing market for many years to come. Over long stretches of time, even premium multiples can look cheap in hindsight. Nvidia remains a great pick for investors looking to profit from the AI revolution. And patience will likely produce the biggest profits.

Wall Street can't stop talking about how 'cheap' Nvidia is now

Artificial intelligence darling Nvidia has become less expensive recently and investors are taking note. "Nvidia's forward PE is now 41% lower than it was on the day ChatGPT was launched on Nov. 30th, 2022," Ben Reitzes, head of technology research at Melius Research, wrote in a Monday note to clients. "Of course, in FY25 its net income was up 788% vs. FY23 (ended 1/23) and revenues are up 384% since then too. Just doesn't feel right, does it?" Over the past three years, Nvidia shares have surged about 370%, bolstered by a boom in AI infrastructure spending. The stock's forward price-to-earnings ratio currently sits at roughly 24, lower than its forward P/E of nearly 40 on March 10, 2022, according to FactSet. Over the past month, however, the stock has fallen around 20%. NVDA 1M mountain NVDA, 1-month That move lower in recent weeks comes after Nvidia plummeted about 17% in late January after Chinese startup DeepSeek raised investor concerns around AI spending and U.S. dominance in the space. Reitzes pointed out that a similar trajectory occurred with megacap technology name Apple , noting that its forward multiple went from 33 times back in 2007 when it announced the iPhone, and then dwindled to 15 times by the end of 2008. "The mobile trend didn't end then -- and Apple now trades at 31x earnings on much larger numbers (benefiting from its durable installed base and huge services business)," he wrote. "If Nvidia duplicates its own version of this industry stewardship, we could look back at this period of uncertainty and have a good chuckle." Others such as Adam Parker of Trivariate Research hold a similar view. He said Nvidia's valuation has gotten "more compelling" even with the chip giant's sales appearing more certain. "NVDA is high beta, and that is one of the reasons we grew cautious on the Mag 7 a month ago. But, the stock is down almost 25% from earlier this year and is trading at relatively low multiples vs. its own history on price-to-forward earnings (now 24x) and on enterprise value-to-forecasted sales," the chief executive wrote in a Sunday note. "At the same time, the sales outlook for calendar year 2025 now looks more achievable than investors feared a few weeks ago." Similarly, Morgan Stanley analyst Joseph Moore reiterated Nvidia as his top pick this week, citing AI investment as a catalyst for more growth ahead in the semis space. The company has an overweight rating on the stock. "Overall commentary across our AI/compute names was very reassuring," Moore wrote in a Sunday note. "In the wake of potential export controls and innovation from DeepSeek, the companies continue to see significant AI investment from hyperscalers." They join most analysts on Wall Street who are bullish on Nvidia. Out of the 63 analysts in total covering the chipmaker, 57 have a strong buy or buy rating, per LSEG. Additionally, Nvidia's consensus price target of roughly $172 implies more than 60% upside from current levels.

Think Nvidia Stock Is Expensive? This Chart Might Change Your Mind. | The Motley Fool

Artificial intelligence (AI) is rapidly transforming the global economy. The technology's ability to automate complex workflows and deliver predictive insight has ushered in a new era of business efficiency while amplifying human creativity. Perhaps no other company has played a bigger role in the AI revolution than Nvidia (NVDA 1.92%). The chip giant's accelerated computing GPUs are now recognized as the backbone of AI infrastructure, powering the most innovative applications. Through that success, shareholders have been rewarded handsomely, with Nvidia stock returning a whopping 1,604% in the past five years. Some investors, seeing that performance, may assume the stock is now too expensive or overvalued. That thinking risks overlooking the big picture, which is Nvidia's massive growth and earnings momentum. Considering those fundamental tailwinds, Nvidia stock may still be attractively priced. Here's why. The latest financial trends from Nvidia were outstanding. For the fiscal year ended Jan. 26, revenue climbed by 114% year over year, driving adjusted earnings per share (EPS) to $2.99, increasing by an even stronger 130% from last year. Wall Street analysts tracked by Yahoo! Finance expect the blistering pace to continue, projecting another 56% revenue growth this year with an EPS target of $4.50 in fiscal 2026. The result is that Nvidia stock is now trading at a forward price-to-earnings (P/E) ratio of 26, well below the five-year average above 70 for the company's earnings multiple. By this measure, Nvidia stock appears downright cheap, especially with no signs that demand for its AI chips is slowing down. There isn't a single data point or valuation metric that alone determines whether a stock is cheap or expensive. The good news is that Nvidia is well-positioned to maintain its AI dominance in a secular growth story that is far from over. With AI adoption accelerating globally, Nvidia remains a best-in-class stock for tech sector exposure.

Nasdaq Correction: Time to Buy the Dip on Nvidia? | The Motley Fool

The Nasdaq Composite (^IXIC -4.30%) has moved into correction territory (down at least 10% from all-time highs). A significant contributor to that drop has been Nvidia (NVDA -5.44%) stock, which is down about 20% year to date, as of this writing. The chipmaker reported outstanding results recently, but investor concerns about tariffs and the U.S. suddenly looking like it could be headed toward a recession have rattled the market in the near term. For investors interested in Nvidia who have a long-term mindset, this price correction presents a great opportunity to scoop up Nvidia shares on the cheap. Let's look at three reasons why the stock is a must-buy for the long term on this dip. With an approximate 90% market share for graphics processing units (GPUs), Nvidia is the dominant leader among the chip designers that are powering the artificial intelligence (AI) infrastructure buildout. While originally designed to speed up graphics rendering in video games, Nvidia's GPUs' fast processing times have made them ideal for helping train large language models (LLMs) and running inference for AI. In addition, the company's CUDA (Compute Unified Device Architecture) platform has helped create a wide moat for the company. Nvidia became the first company to allow GPUs to be programmed for tasks outside their original purpose back in 2006 through CUDA. As such, developers learned to program GPUs using Nvidia's software platform. Rival Advanced Micro Devices (AMD -3.13%) didn't introduce its ROCm (Radeon Open Compute) software platform until about 10 years later in 2016. Meanwhile, through CUDA-X, which was built on top of CUDA, Nvidia now has a full software stack comprised of libraries, microservices, and tools designed to accelerate applications in the areas of AI and high-performance computing. CUDA and CUDA-X continue to be the primary reason for Nvidia's dominance, particularly in AI model training. In a recent study, semiconductor research outfit Semianalysis found AMD's latest GPUs unusable for AI training out of the box due to software bugs, while praising Nvidia's chips. As such, Nvidia remains the company best positioned to continue to benefit from AI infrastructure growth. Despite Chinese AI company DeepSeek's claims of building an effective AI model cheaply (how effective it actually is is in dispute), the best-known way to advance AI models currently is through brute compute-power force. This means building out systems with more and more AI chip clusters. Recent AI model iterations have needed exponentially more GPU chips to be trained on than their predecessors. For example, Meta Platform's Llama 4 LLM needed 10x as many GPUs to be trained on than Llama 3. Elon Musk-backed xAI, meanwhile, originally used 5x the GPUs (100,000) to build out its Grok 3 model before bumping it up to 200,000 GPUs. Meanwhile, cloud computing companies, along with other tech companies, are pouring money into building AI data centers. The big three cloud computing companies plan to spend a combined $255 billion building out AI data centers this year to help keep up with demand. Cloud computing is an infrastructure-as-a-service platform, and customers have been using these services to help customize and build their own AI models and applications. Meanwhile, Meta plans to spend up to $65 billion in capital expenditures (capex) this year largely aimed at expanding its AI infrastructure, while a consortium led by OpenAI and Softbank have pledged to spend $500 billion over the next few years building out AI data centers in the U.S. through Project Stargate. This all points to a lot of continued future spending on AI infrastructure in the years ahead. As such, Nvidia remains well-positioned to continue to grow. The third big reason to own Nvidia is that its stock remains attractively priced. The stock currently trades at a forward price-to-earnings ratio (P/E) of 24 times 2025 analyst estimates and a price/earnings-to-growth ratio (PEG) of below 0.5. PEG ratios under 1 typically indicate a stock is undervalued, and growth stocks will often trade at PEGs well above 1. Nvidia isn't a software-as-a-service (SaaS) company with a recurring and predictable revenue stream, so it isn't going to command the same type of valuation multiple as these types of companies -- nor should it. However, its current valuation is inexpensive, given that we still appear to be in the early days of AI and that AI infrastructure spending will continue to rise. As such, the recent pullback looks like a solid buying opportunity in the stock long term.

Has Nvidia Stock Become Too Cheap to Ignore? | The Motley Fool

Nvidia (NVDA 1.92%) has become a stock market giant thanks to its dominance in one of today's highest-growth markets: artificial intelligence (AI), a $200 billion market that analysts say is heading for $1 trillion by the end of the decade. The tech company has practically built an empire of AI products and services including hardware, software, networking tools, and more -- to serve every AI customer along every step of their AI journey. Chief Executive Officer Jensen Huang has even called the company the "on ramp" to the AI world. And Nvidia's crown jewel is its graphics processing units (GPUs), the fastest chips around that power crucial AI tasks such as the training and inferencing of models. Customers, including the world's biggest tech companie,s Microsoft and Amazon, rush to Nvidia for its latest products, helping the company bring in billions of dollars in earnings. In fact, in the recently closed fiscal year, Nvidia reported a triple-digit gain in revenue to more than $130 billion, a record. The shares have followed, soaring 1,500% over five years. The downside of all of this is, at a certain point, Nvidia's stock traded at levels many investors considered expensive. But, in recent weeks, as stocks declined on concerns about the general economy, so did Nvidia -- and its valuation. In fact, the stock is trading at its lowest in relation to forward earnings estimates in more than a year. Has the stock become too cheap to ignore? Let's find out. First, a quick summary of the Nvidia story so far. This tech superstar wasn't always the center of the market's attention. In its earlier days, it served mainly the video gaming industry with its GPUs -- but as it became clear that these chips could be useful elsewhere, Nvidia developed the parallel computing platform CUDA to make that happen. And when GPUs started serving the AI community, well, the rest is history. AI customers have flocked to Nvidia for these top performing chips, and here's a good example of their popularity, from Oracle co-founder Larry Ellison's comment last year. He said he and Tesla chief Elon Musk took out Nvidia's Huang for dinner and "begged" him for more chips. This is because demand for the products is high. In fact, demand for the company's latest innovation, the Blackwell architecture, has been so high that it's reached "insane" levels, Huang told CNBC in an interview a few months ago. In the company's recent earnings call, it said Blackwell brought in $11 billion in revenue during its first quarter on the market. And at the same time, though the launch for such a complex customizable product is costly, Nvidia still was able to keep gross margin above 70%, showing high profitability on sales. In recent weeks, though, Nvidia stock has faced a number of headwinds. First, as start-up DeepSeek announced it had trained its model on Nvidia's lower-priced GPUs, investors worried others might follow -- resulting in potential revenue declines for Nvidia. Then, the Trump administration's intention to stick with -- and possibly even reinforce --export controls on chips to China proved to be another challenge for Nvidia. Finally, President Trump's launch of tariffs on imports from three key trading partners deepened concerns about economic growth and the earnings of companies that, like Nvidia, manufacture goods outside the United States. As a result, Nvidia stock slid about 14% over the past month. And this has brought valuation down -- Nvidia now trades at only 24 times forward earnings estimates, it's cheapest level in more than a year. Now, let's get back to our question: Is Nvidia too cheap to ignore, or are the headwinds I've mentioned reason to put the brakes on buying this AI player? Well, the DeepSeek issue may have dissipated as major Nvidia customers in recent times spoke of their AI investing plans -- and there hasn't been a single sign of scaling back. In fact, AI spending is soaring. Meta Platforms, for example, says it intends to spend as much as $65 billion this year on its scale up and will end the year with 1.3 million GPUs. As for the chip export controls, they have weighed on Nvidia's revenue in China since they were implemented in 2022. Still, Nvidia, as mentioned above, continues to report significant revenue growth as it excels in other parts of the world. Finally, let's consider Trump's tariffs. They could weigh on Nvidia and many other U.S. companies, but it's important to keep in mind that the current trade war is a temporary challenge. And Trump has delayed the tariffs on products included in the United States-Mexico-Canada Agreement, suggesting there may be some flexibility in their implementation. Looking at Nvidia, specifically, all major signs look positive. The company's reported blowout earnings quarter after quarter, and its market leadership and focus on innovation suggest that could continue for quite some time. All of this means that, at today's price, Nvidia is too cheap to ignore and looks like a screaming buy for long-term investors.

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

The hype for this AI stock may have gotten too hot, but don't overcorrect and miss this buying opportunity. Nvidia (NVDA -5.07%) became the poster child for the rise of artificial intelligence (AI) in early 2023. Data center chips used to train and operate powerful AI models created a fast-growing market that Nvidia has essentially dominated. But just like the internet in the late 1990s, excitement and newness can sometimes let the hype get a bit too far ahead of reality. Lately, the markets have begun letting out some hot air. The Nasdaq Composite is almost 10% off its high, flirting with, technically speaking, a correction. Shares of Nvidia have declined nearly 25% since their peak in early January. It can be frightening when stock prices fall like this, but I'm here to caution investors against letting the selling go too far. Nvidia's dip has arguably created a buying opportunity for long-term investors. I've broken down why and how to take advantage of this below. Like the internet in the late 1990s, the hype behind a new technology could create a bubble. Some internet stocks rocketed higher before crashing when the music (hype) stopped. That could very well happen with some AI stocks. However, Nvidia probably isn't one of them. Nvidia's stock has appreciated tremendously over the past two years, but genuine business growth has carried the stock, not hype. Nvidia has generated $130 billion in revenue over the past four quarters and is still growing at nearly 80%: This trend isn't stopping; the leading technology companies investing in AI data centers, also called AI hyperscalers, have signaled continued investments in 2025. Reports indicated AI spending could top $320 billion this year alone. That comes on the heels of AI hyperscalers, like Alphabet and Microsoft, noting in their most recent earnings that cloud demand for AI continues to outpace available cloud capacity. OpenAI, a leading AI developer and creator of ChatGPT, recently stated it had run out of GPU chips, delaying its product rollouts. It seems that Nvidia's AI growth is genuine and remains red-hot. This is no bubble, not when the stock trades at a price-to-earnings (P/E) ratio of 38, yet analysts believe earnings per share will surge over 50% this year and grow by an average of 34% annually over the long term. There's no such thing as a risk-free stock. The risk to Nvidia is that the small handful of companies investing all this money into AI begin shopping elsewhere or close their wallets entirely. Perhaps that is why Nvidia's valuation is so cheap relative to its anticipated earnings growth. While you can respect the risks (that's why you diversify your portfolio), there is evidence that Nvidia can thrive beyond some temporary AI data center investment cycle. The opportunity in generative AI spans beyond models like ChatGPT to other applications, including autonomous vehicles, humanoid robotics, and agentic AI that replaces humans in call centers. It also goes beyond the enterprise level. As technology advances and costs decrease, AI development will go downstream to smaller enterprises, even individuals. Nvidia recently announced a Blackwell-powered supercomputer that fits on a desktop. Access to AI innovation may extend far beyond today's AI hyperscalers. Nvidia has an inside track to monetizing it as long as the company can build an ecosystem around its dominance in accelerator chips. Nvidia keeps delivering stellar business results. Until that changes, it's hard to doubt the company's standing in arguably this generation's most important technology (AI). Even if Nvidia grew earnings by 19% annually over the long term, half of what analysts currently estimate, the stock's current P/E ratio equates to a price/earnings-to-growth (PEG) ratio of about 2, a reasonable price tag for that growth. In other words, Nvidia offers a margin of safety if things don't go as well as hoped over the coming years. At the same time, stock prices can fluctuate with market volatility and economic and geopolitical changes. The past several weeks have shown that. Nvidia has declined by almost 25%, which could continue if broader market turbulence continues. While Nvidia has a strong argument as the top AI stock to buy now, investors should always move slowly. Consider dollar-cost averaging, buying a little at a time to capture the additional value if prices head even lower. Remember, you will see prices go down unless you perfectly time the bottom, which almost nobody does. Thinking about the next decade, it's hard not to like Nvidia's combination of future upside and present-day value.

Better Artificial Intelligence Stock: IonQ vs. Nvidia | The Motley Fool

Two high-flying artificial intelligence (AI) stocks that have been front of mind for investors recently are IonQ (IONQ -5.94%) and Nvidia (NVDA -8.69%). Semiconductor company Nvidia has soared 53% over the past year as companies have clamored for its processors amid rising AI demand. Meanwhile, the share price of quantum computing company IonQ spiked about 125% over the same period, with investors hopeful that IonQ's tech will advance AI capabilities. AI could be worth an estimated $15.7 trillion by 2030, according to PwC, and with these companies at the forefront of these massive trends, it's worth asking which is the better AI stock right now. Here's the case for each. Nvidia needs no introduction among tech investors, but if you're still trying to figure out why this company is getting so much airtime in the AI conversation, consider these facts: Those are all compelling reasons to own Nvidia stock because they prove just how much the company is already benefiting from AI's rise and its potential to keep growing in the years ahead. For example, Nvidia's AI processor market share means that competitors like Advanced Micro Devices have a slim chance of encroaching on its chip territory any time soon. Similarly, with tech giants committing hundreds of billions of dollars to data center spending, Nvidia is likely one of the biggest winners. Meta Platforms, Alphabet, Microsoft, and others have all said they'll spend hundreds of billions this year alone, with the goal of building out data center infrastructure that can keep up with the demands of AI. Some people think DeepSeek's recent revelation that some AI start-ups can train AI models with fewer and less powerful AI processors spells doom for Nvidia. I disagree. Considering that DeepSeek's AI likely learned from more advanced AI models (known as distillation), it shows that large tech companies can't afford to fall behind in data center spending as smaller rivals nip at their heels. The fact remains that as AI data infrastructure demand increases, companies will look to Nvidia to fill their processor needs. The company recently debuted a new Blackwell AI processor to keep pace with demand, and management said on the latest earnings call that sales have "exceeded our expectations" and reached $11 billion in the fourth quarter. In short, Nvidia is at the forefront of the current AI boom, and while nothing lasts forever, it's premature to think it's done benefiting from it. While quantum computing and AI aren't the same thing, there's often overlap between the two. For example, IonQ's quantum computing system is used by Microsoft and Amazon to give AI researchers access to quantum computing models. There are some compelling reasons why some investors are excited about IonQ right now: IonQ says that its quantum computers can create linear chains of ions with the potential to reach 100-plus qubits (a quantum computer's unit of processing), and that it could have far fewer errors than other quantum computers. The long-term prospects with IonQ comes from the potential that quantum computing could be a transformational technology that advances science, like drug discovery, and creating new AI models. While speculative, big tech companies are pursuing quantum computing, including Alphabet and Microsoft, with the latter recently releasing its own quantum computing processor. Looking at the big picture, quantum computing has massive potential to disrupt traditional computing in the coming decades. But its practical applications are limited right now. Nvidia CEO Jensen Huang threw cold water on the industry recently when he said that their practical applications are still decades away. IonQ falls short in this matchup because its opportunities are too speculative, and its stock is too expensive. The company's shares have a price-to-sales ratio of 167, which is very expensive by any measure. And while IonQ's revenue is growing, it's still unprofitable, with a net loss of $202 million in the fourth quarter. While quantum computing could become the next biggest tech trend, it's still very uncertain if IonQ's business will significantly benefit from it and how long that might take. Meanwhile, its shares are priced for perfection. In contrast, Nvidia's shares are relatively well priced, with a forward price-to-earnings multiple of 30. The company is very profitable, with generally accepted accounting principles (GAAP) earnings per share of $0.89 in the most recent quarter -- an 82% increase from the year-ago quarter. For all these reasons, Nvidia looks like the better AI stock by far right now.

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

However, investors may be torn as to which one is the better stock to buy right now. So, if you're looking to add to one of these massive winners, which one should you pick? First, let's take a look at what each company does best. Nvidia makes graphics processing units (GPUs) and various hardware and software to support their use. While GPUs got their start in gaming graphics, they can also be used to mine cryptocurrencies, process engineering simulations, and help autonomous vehicles navigate. These are large use cases but are dwarfed by the massive demand for GPUs from the AI sector. GPUs are popular because they can process multiple calculations in parallel and be connected in clusters to further amplify this effect. Nvidia is the top GPU producer, and its stock performance backs up that statement. Broadcom is a much broader business than Nvidia. It has products ranging from mainframe computers and software to cybersecurity solutions and virtual desktop software. However, the two product lines that excite AI-focused investors are its custom accelerators and connectivity switches. Broadcom's connectivity switches help direct traffic in data centers and are a vital part of making efficient systems. Its custom AI accelerators are a direct competitor to Nvidia's GPUs and are designed by Broadcom and its tech giant partners (like Alphabet (GOOG -2.07%) (GOOGL -1.92%)) to better handle AI workloads. But these custom accelerators will not dethrone GPUs, as they are only a better choice when a workload is specifically configured to be run through a Broadcom-designed accelerator. Broadcom sees a huge market for these custom accelerators and believes it will be in the range of $60 billion to $90 billion by 2027. Given that Broadcom's AI revenue base was $12.2 billion in fiscal year 2024 (which includes its connectivity switches and custom accelerators), this would represent massive growth. It would also likely take market share away from Nvidia, which posted data center revenue of $115 billion in fiscal year 2025 (ending Jan. 26). While I'm not going to debate whether GPUs or custom accelerators will be the way of the future, it is important to watch some of Nvidia's biggest clients to see if they begin discussing using their proprietary designs solely or continue to order mountains of Nvidia GPUs. While it's impossible to know how this will play out, one stock clearly looks like a better buy right now. When comparing these two stocks' valuations, using a trailing earnings metric is impossible because Broadcom has a one-time effect that throws this metric out of whack. Instead, I'll use the forward price-to-earnings (P/E) ratio to assess each stock's valuation. At 27 times forward earnings, Nvidia's stock is a fair bit cheaper than Broadcom's. This is noteworthy, as Nvidia is growing far faster than Broadcom. While investors are excited about the prospects of Broadcom's AI hardware, the reality is that it only makes up a fraction of the company's total revenue. In 2024, its AI-related revenue was $12.2 billion, about 24% of total revenue. While these segments were growing quickly, they were drowned out by their overall business. At face value, Broadcom looked like it grew 44% year over year, but Broadcom's VMware acquisition heavily influenced that. Without that purchase, Broadcom's revenue only grew 9% organically. Contrast that with Nvidia's fiscal year 2025 growth of $130.5 billion, up 114% year over year, and it's clear that Nvidia is the better stock to buy. While Broadcom may be a darling in the market's eyes, it's clear that Nvidia is still the better stock to buy right now. With Nvidia's stock a bit weak following earnings, investors should use this opportunity to scoop up shares of this dominant AI player.

Better Artificial Intelligence Stock: Oracle vs. Nvidia | The Motley Fool

Oracle shares are up about 54% over the past 12 months through Feb. 26. Nvidia stock gained 70% over that time. Both are poised to rise higher since each company was chosen to participate in the U.S. government's Stargate program, which plans to invest half a trillion dollars into AI infrastructure. But if you had to choose just one of these AI success stories, which company makes for a superior long-term investment? Let's dive into Oracle and Nvidia to arrive at a verdict. Oracle has been a staple of the tech sector since its inception in 1977 with its database offerings. But the company's fortunes went into overdrive after the AI frenzy began in late 2022 with the arrival of ChatGPT. For example, Oracle's revenue rose 9% year over year to $14.1 billion in its fiscal second quarter, ended Nov. 30, 2024. Its sales growth was due to the company's cloud computing business, which enjoyed a 24% year-over-year increase in Q2 revenue to $5.9 billion. What caused its cloud division to see explosive growth? Businesses building AI need computing infrastructure to train the software to correctly execute tasks and are leveraging Oracle's global footprint of data centers to do so. The company's cloud infrastructure makes sense for training AI. Oracle's history with databases, where AI data is stored, coupled with fast, low-cost cloud services, make AI training on Oracle's platform a compelling proposition. Consequently, the firm has become one of the top five largest cloud providers in the world. This has not only meant higher sales. Oracle's fiscal Q2 earnings per share (EPS) rose 24% year over year to $1.10, showing the company's AI success translated into gains for shareholders. Oracle is capitalizing on its AI prosperity by expanding its footprint of more than 150 data centers. The greater the number of facilities it owns, the more customer business it can support, thereby increasing income. The firm's founder and CTO Larry Ellison sees the possibility of eventually operating thousands of data centers as the path to future revenue growth. Nvidia has been one of the biggest beneficiaries of the AI boom. The firm reported record quarterly revenue for the last seven quarters. The latest was its fiscal fourth quarter, ended Jan. 26, where it made $39.3 billion, a 78% increase from the prior year. The reason for Nvidia's success is its products for data centers. The company provides components necessary for AI systems to process the vast amounts of data required by the software, such as for AI training. That's why Nvidia counts Oracle among its customers. Because its products are critical for AI, Nvidia's Q4 sales to data centers grew a whopping 93% from a year ago to $35.6 billion. The company's strong performance translated into EPS of $0.89 in Q4, up 82% year over year. Nvidia expects its sales success to continue thanks to the demand it's seeing for its new Blackwell computing platform, which was specifically designed for AI. As a result, the firm forecasted Q1 revenue for its 2026 fiscal year to come in around $43 billion. That's an impressive 65% increase from the prior year's Q1 sales of $26 billion. The strong financial performances Oracle and Nvidia are delivering, combined with customer demand for their products and services, mean choosing between the pair is a tough call. One consideration is to look at their stock valuations using the forward price-to-earnings (P/E) ratio. This metric tells you how much investors are willing to pay for a dollar's worth of earnings based on estimates for the next 12 months. Nvidia's forward P/E multiple had been far higher than Oracle's, but plunged toward the end of January. The decline occurred after Chinese AI start-up DeepSeek shocked Wall Street on Jan. 27 with a reported lower-cost AI solution, prompting fears Nvidia's pricey products would see a drop in sales. This caused Nvidia's stock price to fall. Now, Nvidia's forward P/E is close to Oracle's, meaning neither possess a significant advantage over the other from a valuation perspective. But it does mean Nvidia shares have become more reasonably priced at the time of writing. This, combined with its new Blackwell platform, make Nvidia a compelling AI stock to buy. According to Nvidia CFO Colette Kress, Blackwell sales represented "the fastest product ramp in our company's history, unprecedented in its speed and scale." The platform contributed $11 billion to Nvidia's $39.3 billion in Q4 revenue, and as a new product, Blackwell sales are just getting started. As a result, the company edges out Oracle as the better AI investment for the long term.

Nasdaq Correction: 1 Unstoppable Stock to Buy Before It Soars 600%, According to 1 Wall Street Analyst | The Motley Fool

Strong secular tailwinds and several sizable opportunities will continue behind the current market downdraft. The Nasdaq Composite (^IXIC -4.00%) has been riding high for more than two years now, as waning inflation, the prospect of lower interest rates, and the emergence of artificial intelligence (AI) helped fuel its impressive gains. In fact, since the bull market began in late 2022, the tech-centric index climbed as much as 95% before the recent market swoon. Since its peak in December, however, the Nasdaq has dipped into correction territory, falling more than 10% from its recent high. While moves of that magnitude can be unnerving, they also provide astute investors with the opportunity to pick up quality stocks at a discounted price. One such stock is Nvidia (NVDA -5.07%). The company has become the de facto poster child for the AI revolution, which pushed its stock to new heights, gaining as much as 965% in just over two years. However, fears about the pace of AI adoption, geopolitical concerns, and economic headwinds have weighed on Nvidia, which is down 28% from its peak (as of this writing). But there's good news. Looking beyond the current weakness, Nvidia has the potential to become the world's first $20 trillion company, which would represent additional upside of more than 600%, according to one Wall Street analyst. Nvidia pioneered the graphics processing unit (GPU) in 1999, revolutionizing the video game space. What set GPUs apart from existing technology was parallel processing, or the ability to conduct a multitude of mathematical computations simultaneously. By breaking up computationally intensive tasks into smaller bits, they can be accomplished much more quickly. Nvidia quickly discovered that this breakthrough in technology could be used to speed up other applications, and its state-of-the-art chips quickly became the gold standard for high-performance computing (HPC), data centers, cloud computing, and -- most recently -- AI processing. Furthermore, there's more to Nvidia's GPUs than meets the eye. The company's Compute Unified Device Architecture (CUDA) programming platform and software architecture aids developers in getting the most out of the GPU. Nvidia provides more than 400 libraries that help developers "build, optimize, deploy, and scale applications across PCs, workstations, the cloud, and supercomputers using the CUDA platform," according to the company. This ability to tap into the full power of the GPU has made it the top choice for a generation of developers, making it the industry standard in the process. Since CUDA is so deeply ingrained in the computing industry, it's the odds-on favorite to continue. Nvidia currently sports a market cap of roughly $2.62 trillion, which implies stock price gains of 664% to drive its value to $20 trillion. According to Wall Street, Nvidia is poised to generate revenue of nearly $204 billion in fiscal 2026, giving it a forward price-to-sales (P/S) ratio of roughly 13. Assuming its P/S remains constant, Nvidia would need to grow its revenue to roughly $1.5 trillion annually to support a $20 trillion market cap. Wall Street is currently forecasting revenue growth for Nvidia of 50% annually over the next five years. If the company can maintain its robust growth rate, it could actually achieve a $20 trillion market cap as soon as 2031. To be clear, however, quite a few stars would have to align for Nvidia to reach this threshold, and to be honest, I think it's a long shot. One Wall Street analyst is among Nvidia's biggest bulls. Phil Panaro, founder and former CEO of Boston Consulting Group Platinion, argues, "I believe Nvidia will hit $800 by 2030." That works out to a market cap of $19.52 trillion, or just short of $20 trillion. The analyst lays out three factors that he believes will drive Nvidia's market cap above that lofty threshold: Panaro believes that this trifecta of opportunities will underpin the 50% annual revenue growth needed to support a $20 trillion market cap for Nvidia. While that analyst's case is intriguing, the current market conditions could hamper Nvidia's progress. To be clear, I'm a long-term Nvidia investor, and the stock makes up 10% of my portfolio, making it my third-largest position. I have no doubt that Nvidia will continue to thrive, but I am equally sure the road ahead will have challenges. Nvidia has followed the broader market lower as questions about inflation, consumer demand, geopolitical issues, and the rate of AI adoption linger. If these conditions persist, the market -- and Nvidia -- could have further to fall. As recently as 2022 Nvidia stock plunged 66% during the economic downturn -- which sent many fair-weather investors running for cover. This helps illustrate the point that Nvidia stock is volatile and isn't for the faint of heart. Investors will need to steel themselves to ride out the inevitable peaks and valleys that are part of the cost of admission for a stock that could be a potentially life-changing investment. Yet the current decline in the Nasdaq represents a compelling opportunity for investors who have been waiting for Nvidia to go on sale. The stock is currently trading for less than 24 times forward earnings (as of this writing), which is an attractive price to pay for a company with such a vast opportunity ahead. So, while it may not get to $20 trillion over the next few years, I have little doubt that Nvidia stock will crush the market going forward.