Investors Eye Nvidia Amid AI Market Fluctuations

Many investors who hesitated to buy artificial intelligence (AI) stocks last year may feel as though they missed an opportunity. Stocks in this sector surged, achieving high valuations on hopes that AI would revolutionize industries, much like the internet did years ago. Recently, however, many of these high-flying stocks have paused or even fallen in value.

The decline in stock prices does not reflect AI’s vast potential. Analysts still project the AI market could exceed $2 trillion within the next decade. Instead, these price drops are tied to broader economic concerns and worries about near-term earnings growth. Investors express apprehension over President Donald Trump’s tariff impositions, fearing they could lead to increased costs and negatively impact the economy.

Long-Term Growth Amid Economic Concerns

Despite challenges ahead for many industries, strong, established companies have the resilience to navigate tough conditions and continue to grow. This environment presents renewed opportunities for investors to engage with AI stocks at more favorable prices. One notable example is the AI company Nvidia, which looks particularly promising in May.

Image source: Getty Images.

Nvidia’s Market Position

Nvidia has been an early player in the AI sector, supplying chips to customers before the market exploded. The company has maintained a strong focus on innovation and adaptation. Initially, Nvidia generated most of its revenue from gaming GPUs, but in recent years, sales to AI clients have become the largest revenue source. In the latest quarter, AI-related sales accounted for 90% of total revenue.

Dominating the AI chip market, Nvidia’s GPUs are known for their speed, efficiency, and cutting-edge features. While they are also the most expensive on the market, tech giants like Meta Platforms and Microsoft are eager to invest in Nvidia’s products to establish strong platforms.

Upcoming Catalysts for Growth

Nvidia is well-positioned as a long-term investment in AI. Notably, the timing might be right for new purchases, with key developments expected soon. The company’s fiscal first-quarter earnings report for 2026 is due on May 28, followed by a shareholder meeting on June 25. Having launched its Blackwell chip this winter, Nvidia generated $11 billion in revenue in its first quarter, and high demand may lead to positive reports ahead.

Despite facing challenges such as potential tariffs and U.S. export restrictions to China, Nvidia is actively working on solutions. Recent investments in U.S. manufacturing and plans to adapt chip designs could help the company navigate these obstacles, potentially enhancing stock performance.

Attractive Valuation

Purchasing Nvidia shares now allows investors to enter at a valuation close to its annual low in terms of price-to-forward earnings estimates. Currently, the stock trades at 25 times earnings estimates, down from over 48 times earlier this year.

Investing in Nvidia before May 28 offers the chance to acquire shares at a bargain price, with catalysts for near-term growth. Even if immediate gains are absent, Nvidia is likely to benefit over time thanks to its leadership and innovation in the rapidly growing AI sector.

A New Opportunity for Investors

If you’ve ever felt you missed out on top-performing stocks, Nvidia’s current situation may present another chance. Rarely, analysts issue “Double Down” recommendations for stocks they believe are poised for growth. Current evidence suggests that now may be the best moment to invest before prices rise.

• Nvidia: Investing $1,000 when the recommendation was made in 2009 would have grown to $296,928!*
• Apple: A $1,000 investment from 2008 would be worth $38,933!*
• Netflix: If you invested $1,000 in 2004, it would be valued at $623,685!*

At present, three “Double Down” alerts are available which could present significant investment opportunities.

*Stock Advisor returns as of May 5, 2025

Disclosure: Randi Zuckerberg, a former Facebook executive, is a board member for The Motley Fool. Adria Cimino holds no stock positions in the companies mentioned. The Motley Fool recommends Nvidia, Meta Platforms, and Microsoft.

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