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It’s surprising that Nvidia (NVDA) stock, once soaring to new heights, is now facing pressure. Despite surging demand for its GPUs, which are powering the artificial intelligence (AI) revolution — especially in the booming data center market — the stock has taken a hit.
Notably, NVDA delivered staggering gains of over 405% over the past two years. But recently, it has stumbled, slipping more than 24% from its 52-week high.
The fundamentals of Nvidia remain as strong as ever, but a few factors have weighed on investor sentiment. Concerns over a potential slowdown in AI infrastructure spending, short-term margin pressures, export curbs to China, and broader macroeconomic uncertainty — such as tariffs — have all contributed to the stock’s recent dip.
However, a pullback doesn’t necessarily mean that NVDA’s appeal is gone. What was once a soaring momentum stock has shifted into a more attractive value play, making this dip in NVDA stock a potential entry point for long-term investors.
Nvidia is still at the forefront of the AI revolution, with demand for its chips far exceeding supply. Its next-generation Blackwell architecture is scaling rapidly, positioning the company for another wave of strong growth.
With this backdrop, let’s look at the company’s growth trajectory and valuation to determine whether this could be the perfect moment for investors to buy NVDA before it takes off again.
Nvidia’s Growth Engine Still Firing on All Cylinders
While concerns about a potential slowdown in AI spending and short-term margin pressures have weighed on market sentiment, Nvidia’s growth story remains intact. The company continues to deliver record-breaking revenue and earnings, proving that demand for its AI chips remains as strong as ever.
Nvidia’s latest earnings report and guidance silenced any fears about AI demand slowing down. The company reported $39.3 billion in revenue for the latest quarter, marking a 12% increase from the previous quarter and a 78% surge year-over-year. Even more impressive, Nvidia’s full-year revenue for fiscal 2025 skyrocketed to $130.5 billion, up 114% from the previous year.
The primary driver behind this explosive growth is its data center segment. In FY25, data center revenue more than doubled to $115.2 billion. In the fourth quarter alone, data center sales reached a record $35.6 billion, up 16% from the previous quarter and 93% from the previous year.
The ongoing AI revolution is driving demand for Nvidia’s high-performance chips. Its Hopper platform has already seen immense growth, and now, Nvidia’s next-generation Blackwell architecture is hitting the market at breakneck speed. The early results are remarkable — Blackwell sales contributed $11 billion in Q4, making it the fastest product launch in Nvidia’s history. Businesses are eager to adopt these chips to power the next wave of AI innovation, further reinforcing Nvidia’s dominant position in the industry.
Despite short-term concerns about margins, Nvidia remains highly profitable. In Q4, the company reported adjusted earnings per share (EPS) of $0.89, up 10% sequentially and 71% year-over-year. More importantly, Nvidia’s margin headwinds are temporary, meaning profitability should remain strong in the long run.
The company forecasts a significant ramp-up in Blackwell shipments, with growth anticipated across its Data Center and Gaming segments. The data center division, in particular, is expected to expand further, fueled by rising demand for AI-driven compute and networking solutions.
Nvidia’s Valuation Looks Attractive
The recent pullback in Nvidia’s stock price has made its valuation more appealing. NVDA trades at a forward price-earnings (P/E) multiple of 26.3x. This valuation looks attractive given Nvidia’s earnings growth potential over the next couple of years and dominant market position.
Moreover, the company has multiple catalysts to support future expansion. The AI revolution is still in its early stages, and Nvidia’s chips remain essential for training and running advanced AI models. As more businesses integrate AI into their operations, demand for Nvidia’s products is expected to stay robust.
The Bottom Line
Nvidia’s recent stock dip doesn’t signal weakness. Rather, it is an opportunity for investors to buy a high-quality company at a more attractive valuation. The AI boom is far from over, and Nvidia remains at the forefront of this technological revolution. With strong earnings, continued product innovation, and a solid outlook, NVDA stock is ready for takeoff.
Wall Street remains bullish on Nvidia, with analysts maintaining a consensus “Strong Buy” rating. Moreover, analysts’ average price target of $177.59 indicates significant upside potential over the next 12 months.
