Is Nvidia, at Bargain Levels Right Now, a Buy? Here Are the Bull and Bear Cases.

Nvidia (NASDAQ:NVDA) is often seen as the stock to buy for investors interested in betting on the artificial intelligence (AI) revolution. That's because the company's graphics processing units (GPUs) play a key role in the development and use of AI and have generated mind-boggling revenue growth.

Nvidia's annual revenue has climbed 700% over the past five years, reaching $215 billion in the last fiscal year. And the pace continues, with Nvidia itself for the first time offering annual revenue guidance -- the company expects 70% growth in the next fiscal year. Considering this, you may expect Nvidia stock to be expensive. But the stock isn't. In fact, it's reached bargain levels, trading at only 25x forward earnings estimates.

Is Nvidia, at this dirt cheap price, a buy right now? Here are the bull and bear cases to consider before making a move.

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The Nvidia bull case

Nvidia dominates the AI chip market thanks to its early entry into this space and its commitment to innovation. These two elements have kept it a step ahead of rival chip designers in the data center market. On top of this, Nvidia recently turned its attention to a fresh area of high potential: The company is in the process of launching its first stand-alone central processing units (CPUs).

These are the chips found in every computer, but here's why Nvidia is interested now: They are the key chips needed to power agentic AI, which involves AI considering a problem and taking steps to solve it. Agentic AI is seen as the next AI growth driver, so this clearly is an important area for Nvidia. The company already predicts $20 billion in CPU sales this year and has said it aims for market leadership in this space.

Nvidia, fellow chip designers, and cloud service providers have all delivered the same message quarter after quarter: Demand for AI continues to soar. And with the AI market forecast to reach into the trillions of dollars by the end of the decade, Nvidia is well-positioned to benefit.

The Nvidia bear case

Nvidia's revenue is highly dependent on AI, with data center revenue making up 92% of total revenue in the most recent quarter. So any slowdown in AI spending could significantly hurt Nvidia's earnings and, eventually, its stock price.

What could cause such a slowdown? If cloud service providers see lower customer demand, they might decide to delay investments. So far, this hasn't been the case, but it remains a possibility -- and even a temporary reduction in AI spending may be difficult for Nvidia.

Though rivals would find it difficult to unseat Nvidia, they still could capture more and more market share as they continue to innovate -- and if their innovations please the AI customer, this could eventually weigh on Nvidia's pricing power.

Finally, Nvidia's sales to China -- a key AI market -- were blocked by the U.S. government back in April of 2025. Even though the U.S. has since authorized such sales, China's government has encouraged the use of local chips over imports. This could limit Nvidia's growth potential over time, and eventually, China may develop high-performance rival chips.

Should you favor the bull or bear case?

It's true that, in recent times, investors have worried about a potential slowdown in AI spending and the impact it may have on companies such as Nvidia. Demand today remains strong, with tech giants aiming to spend nearly $700 billion this year on infrastructure. Any slowdown could indeed represent a big hurdle for Nvidia, but it's unlikely that even this would alter the bright long-term AI story. Companies have already applied AI to some degree and seen its value, so they're likely to want to continue benefiting from the technology as it develops.

Meanwhile, Nvidia's venture into the CPU market offers the company a fresh growth driver in the quarters to come. With this complete picture in mind, and Nvidia's bargain valuation today, I favor the bull case and consider Nvidia a top AI stock to buy now.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.