Nvidia’s Stock Dips Amid Market Challenges: Time to Buy?

On January 6, shares of semiconductor leader Nvidia (NASDAQ: NVDA) reached an all-time high of $149.43, giving the company a market capitalization of approximately $3.7 trillion. However, these peaks proved short-lived, with 2025 presenting a blend of new tariff policies, mixed economic indicators, uncertainty surrounding the Federal Reserve’s decisions, and the rise of a Chinese AI start-up, DeepSeek, contributing to a steep decline in Nvidia Stock.

Currently, Nvidia’s market cap stands at $2.9 trillion, reflecting a drop of $800 billion from just months before. As investor confidence wanes, one pressing question arises: is Nvidia Stock still worth purchasing? Let’s explore the details.

Solid Performance from Nvidia’s Core Business

Recently, Nvidia announced its earnings for the full fiscal year 2025, which concluded on January 26. The company’s computing and networking divisions emerged as key growth drivers, bolstered by their graphics processing units (GPUs), which are crucial for AI data centers.

The data center arm reported $115 billion in revenue, reflecting a remarkable 142% year-over-year increase. In this sector, computing revenue surged by 162%, while networking revenue rose by 51% year over year. The fourth quarter alone generated data center revenues of $35.6 billion, nearly doubling from the fourth quarter of the previous year, largely fueled by the successful launch of its new GPU architecture, Blackwell.

Image Source: Nvidia.

Macro Trends Indicating Nvidia’s Future Potential

Key players in the AI industry have started outlining their investment plans, which could provide insight into Nvidia’s potential trajectory. For instance, Apple is set to invest $500 billion over the next four years in areas such as silicon engineering and manufacturing. Additionally, Taiwan Semiconductor Manufacturing—Nvidia’s chip production partner—is expanding its presence in the U.S. with a $100 billion investment.

Cloud computing giants like Amazon, Microsoft, and Alphabet are also boosting their capital expenditures, collectively anticipating more than $250 billion in AI infrastructure spending by 2025. Each of these companies collaborates with Nvidia in various capacities, from chip manufacturing to outfitting data centers. With nearly $1 trillion earmarked for infrastructure development over the coming years, Nvidia’s growth potential appears promising.

Should You Invest in Nvidia Stock Now?

In my previous assessments, I marked November 30, 2022, as the catalyst for the AI revolution, coinciding with OpenAI’s commercial launch of ChatGPT. Since then, Nvidia Stock has soared by 615%. Such dramatic increases may lead some to believe the stock is past its prime.

NVDA Market Cap data by YCharts.

However, historical data reveals a pattern. Though the Stock has experienced significant growth, it has also faced notable downturns. Importantly, previous sell-offs were typically brief, with stocks rebound to new heights. Despite its recent gains, I believe Nvidia Stock is positioned for a rebound. Currently, shares are trading at a historical discount, with a forward price-to-earnings (P/E) ratio of 26.7, significantly lower than its three-year average and 47% off its peak during that time.

NVDA PE Ratio (Forward) data by YCharts.

Given the company’s record performance, favorable industry trends suggesting ongoing demand for AI infrastructure, and stock resilience, now may be an opportune moment to purchase Nvidia shares while they remain discounted.

Seize This Second Opportunity to Invest Wisely

Have you ever felt you missed a chance to invest in successful stocks? If so, consider this your timely opportunity.

In rare cases, our team of analysts issues a “Double Down” Stock recommendation for companies they believe are on the verge of significant growth. If you worry that you’ve missed your chance to invest, now is the ideal time.

• Nvidia: If you had invested $1,000 when we doubled down in 2009, you would now have $284,402!
• Apple: If you had invested $1,000 when we doubled down in 2008, you’d have $41,312!
• Netflix: If you had invested $1,000 when we doubled down in 2004, you’d have $503,617!

Currently, we are providing “Double Down” alerts for three remarkable companies, and another opportunity like this may not arise soon.

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*Stock Advisor returns as of March 24, 2025

Suzanne Frey, an executive at Alphabet, sits on The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, another Amazon subsidiary, is also a board member. Adam Spatacco holds positions in Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.