Nvidia Stock Is Down 20%. Is It Time to Buy the Dip on the AI Leader?

Source The Motley Fool

It's been a rough start to the year for Nvidia (NASDAQ: NVDA) shareholders. As of this writing, shares are down about 12% year to date and 20% below its January highs. The news from the company must be bad, right?

Well, not exactly. Late last month, Nvidia reported fourth-quarter and full-year earnings for its fiscal 2025 period, which ended Jan. 26. The news was good, not bad. Nvidia impressed analysts and investors once again by exceeding both top- and bottom-line estimates. Guidance called for another jump in revenue in the current quarter to a record $43 billion. So, let's look at what has the stock plunging in 2025.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Market correction = opportunity

Some of the same things that have driven the Nasdaq Composite into correction territory have caused fear and uncertainty around Nvidia stock. The Trump administration has announced -- and changed -- several applications of import tariffs that could affect Nvidia's business. On top of that, national security concerns have raised the prospects for more export restrictions on Nvidia's powerful artificial intelligence (AI) chips.

The tariffs themselves could have both direct and indirect implications for Nvidia. There are concerns that tariffs could hinder economic growth and create an inflationary environment. Either of those situations could negatively impact semiconductor chip sales. After all, if a company building out data center capacity believes returns on investments will be impacted, it may very well reduce or delay those investments.

Nvidia's share price skyrocketed over the last 18 months as investors forecast impressive revenue growth to continue. It's been nothing short of amazing. Sales began to soar in 2023. Revenue jumped 126% in fiscal 2024, ending Jan. 28, 2024. It didn't slow down in fiscal 2025, either. Growth of another 114% for that period ended this January, and the stock continued to run higher.

That is, until recently.

Nvidia investors shouldn't worry

The 22% drop from its January high mark might just be a great opportunity for those who feared they missed out on owning Nvidia stock. As of this writing, it was trading at a price-to-earnings (P/E) ratio of just about 25 based on calendar year 2025 earnings. That's pretty attractive compared to the 10-year average P/E of 32 for the Nasdaq-100 index.

That's its lowest level since earnings estimates skyrocketed early last year. The stock itself has more than doubled since the start of 2024.

NVDA PE Ratio (Forward) Chart

NVDA PE Ratio (Forward) data by YCharts

Nvidia still has plenty of opportunities for growth. Barring any major development of a trade war or recession, revenue should increase about 50% this year. That's mostly driven by the Blackwell AI architecture, which is now in full production. There are many business development possibilities beyond that.

Nvidia touches most everything

The Rubin platform will succeed Blackwell with an even more powerful AI suite of offerings. But AI is more than just data center computing power, too. Companies developing autonomous vehicle (AV) technology are also loading up on Nvidia's products for training purposes. The company says all 30 of the existing top AV data centers are powered by it.

Revenue in its gaming segment grew to over $11 billion last year. More than 200 million gamers and creators use Nvidia GeForce GPUs (graphics processing units). Millions of developers have downloaded its Monai open-source framework for healthcare imaging AI. Perhaps most potential will come from robotics as businesses utilize that evolving technology to improve efficiency. Nvidia says over 1.3 million developers already use the Nvidia Jetson high-performance computer platform for tasks including robotics, computer vision, and generative AI.

Nvidia has many irons in the fire. While revenue growth will slow to about 50% this year, its lineup of AI chips and software stacks is unmatched and constantly improving. Add in the possible catalysts from other segments, and its very reasonable recent valuation, and it looks like a compelling time to buy the dip in Nvidia stock.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $315,521!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,476!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $495,070!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of March 14, 2025

Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changedRate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
Author  Irene Q.
Sep 23, Wed
Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
placeholder
Four jobs reports in five days: what JOLTS, ADP, claims and the September payrolls mean for the October Fed decisionThe US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.
Author  Mitrade
Sep 28, Mon
The US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.
placeholder
Nvidia's $150 billion buyback landed — and the AI sector fell anyway. That's the signal worth tradingNvidia closed up 1.68% at $228.86 on 28 September after announcing a $150 billion share repurchase authorisation, the largest single corporate buyback on record, while the rest of the AI complex sold off: AMD -3.6%, Micron -2.6%, Meta -4.8% and the Philadelphia Semiconductor Index -1.61%. The divergence is not noise. Capital is rotating toward cash-flow certainty, not abandoning the AI theme. With Micron reporting after the close on 30 September, here is what the split means.
Author  Irene Q.
Sep 29, Tue
Nvidia closed up 1.68% at $228.86 on 28 September after announcing a $150 billion share repurchase authorisation, the largest single corporate buyback on record, while the rest of the AI complex sold off: AMD -3.6%, Micron -2.6%, Meta -4.8% and the Philadelphia Semiconductor Index -1.61%. The divergence is not noise. Capital is rotating toward cash-flow certainty, not abandoning the AI theme. With Micron reporting after the close on 30 September, here is what the split means.
placeholder
【Daily Brief】30-year Treasury tops 5.59%, S&P 500 slips to 7,670 and gold holds $4,180 — PCE lands tonightThe 30-year Treasury yield closed at 5.59%, its highest since June 2002, and the Dow fell 131.59 points to 51,349.92. US consumer confidence dropped to 81.9, a 12-year low, and JOLTS job openings fell to 7.1 million. August PCE and Q3 GDP both land at 8:30am ET tonight.
Author  Suzie
Sep 30, Wed
The 30-year Treasury yield closed at 5.59%, its highest since June 2002, and the Dow fell 131.59 points to 51,349.92. US consumer confidence dropped to 81.9, a 12-year low, and JOLTS job openings fell to 7.1 million. August PCE and Q3 GDP both land at 8:30am ET tonight.
placeholder
Gold falls to near $4,150 as higher Treasury yields, oil prices outweigh softer PCE inflationGold price (XAU/USD) tumbles to near $4,150 during the early Asian session on Thursday, pressured by elevated US Treasury bond yields. Traders await the US September employment data for fresh impetus, which will be released later on Friday. 
Author  FXStreet
22 hours ago
Gold price (XAU/USD) tumbles to near $4,150 during the early Asian session on Thursday, pressured by elevated US Treasury bond yields. Traders await the US September employment data for fresh impetus, which will be released later on Friday. 
goTop
quote