3 Reasons to Buy Nvidia Stock in July

Nvidia (NASDAQ: NVDA) is capping off another successful quarter of trading. The global leader in artificial intelligence (AI) is trading 12% higher heading into the final trading day of the calendar quarter.

But June has been a bust. Nvidia is trading 8% lower in this otherwise resilient month for the markets. Market leadership has shifted from the initial AI leaders to beneficiaries like memory and data storage manufacturers. The upticks there have been driven by demand outstripping supply, resulting in surging prices and thick margins for a historically cyclical industry.

Could this also be an opportunity for existing or potential Nvidia investors? Let's go over some of the reasons why the stock with the largest market cap can bounce back in July.

Image source: Getty Images.

1. Nvidia doesn't lose the headline war forever

Don't let June's slide dissuade you. Nvidia stock has continued to be a winner over longer stretches of time. The 5% year-to-date return is trailing the market, but zoom out, and you'll see the stock is up 24% over the past year, more than quadrupling over the three years and almost a 10-bagger over the past five years.

Some of the June headlines are unflattering but potentially misleading:

• Other "Magnificent Seven" stocks are starting to sell their own AI chips.
• Nvidia had a massive $25 billion bond sale this month, its first debt offering in five years.
• Despite several head fakes over the past year, Chinese restrictions for AI remain painfully in place.

Nvidia seems to be fighting upstream in the headwind headline war. It won't always be that way. Remember when Nvidia stock was rattled in early 2025 by reports that China's DeepSeek was achieving major AI advancements on older, less powerful chips? That ultimately didn't slow Nvidia down.

2. This is still a great growth stock

Nvidia doesn't report its financials again until late August. It operates on a different fiscal calendar than many tech titans, which report in the latter half of July.

It's still delivering strong results. Revenue soared 85% in its latest financial report. Margins continue to improve, with adjusted earnings blasting 139% higher.

Nvidia is doing this even amid a sharp reversal in its sales in China, rising competition, and percolating supply chain constraints. The company continues to deliver market-thumping results on a stunning 55.7% adjusted net margin. History is a long game, but Nvidia continues to win the quarterly chapters.

3. The stock is even cheaper than you think

Nvidia stock is moving lower in June. Expectations are going the other way. Analysts see Nvidia earning $8.97 per share this fiscal year and $12.76 per share in the new fiscal 2028 year, which starts in late January of next year.

A month ago, those per-share adjusted net income targets stood at $8.95 and $12.66, respectively. Three months ago, those adjusted per-share earnings estimates stood at $8.30 and $11.11, respectively.

As an investor, it's important to recognize moments when market sentiment diverges from fundamentals. If the future is getting cloudy or showing signs of deterioration, that's a fair time to get cautious. But when the outlook is only getting better, that's often a buying opportunity.

How expensive do you think Nvidia is these days? I'll spare you the suspense of overestimating the numbers. Based on Monday's close of $194.97, the world's most valuable company by market cap is trading for less than 22 times this year's earnings. Step up to the new fiscal year that starts in seven months, and Nvidia is fetching just 15 times Wall Street's profit target for that year.

There's no denying that Nvidia's competitors are getting smarter, and that institutional rotation has shifted from the wearer of the AI coat to the coattails. Nvidia is still trading at a discount to many tech players that are growing more slowly and have yet to prove their AI resilience. Don't let the rough June get in the way of Nvidia's potential to heat up this summer.

Rick Munarriz has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.