Nvidia’s Stock Volatility: Assessing Future Growth Amid Tariff Changes

Nvidia (NASDAQ: NVDA) has experienced significant trading fluctuations recently. Initially, concerns over the demand for advanced artificial intelligence (AI) hardware and new import tariffs led to a drop in share price. However, following the Trump administration’s relaxation of tariff policies, Nvidia’s stock rebounded sharply, attracting investor attention.

As Nvidia’s stock climbs in light of these policy adjustments, many investors are questioning whether it’s still a good time to buy. Insights from Motley Fool contributors offer a glimpse into Nvidia’s prospects over the next three years.

Nvidia’s Competitive Edge in AI Processors

Keith Noonan: Nvidia has been a leader in advanced graphics processing units (GPUs) and accelerators since the AI boom began a few years ago. Currently, there are no significant threats from competitors like Advanced Micro Devices and Intel, who appear to be lagging. While Chinese companies such as Huawei may innovate in the future, demand for their products is likely to remain limited to China and its partners.

The competitive advantages that AI offers make it a high-priority investment area for both businesses and governments. Nvidia has further solidified its position with its CUDA software platform, which optimizes the use of AI processors. This robust ecosystem complicates efforts for AMD, Intel, and others to encroach upon Nvidia’s dominance.

Nvidia’s solid sales and profit margins allow greater flexibility to explore new ventures, such as AI software and robotics. Competitors are struggling in the AI processor sector, which likely constrains their ability to invest outside of their primary focus areas.

Though macroeconomic and geopolitical uncertainties loom, Nvidia’s leadership in AI processing is expected to deliver strong sales and earnings growth. This positioning should aid its expansion into new business realms. Nevertheless, macroeconomic and geopolitical factors represent significant risks that could affect Nvidia’s stock performance in the coming years.

Value Investors Eye Nvidia

Jennifer Saibil: Nvidia previously showcased impressive stock growth before becoming widely recognized during the generative AI surge. Uncertainties about the future complicate the evaluation of its long-term viability and the timing for potential purchases.

Historically, Nvidia achieved success with its gaming products, but its prominence skyrocketed due to its crucial role in the generative AI market. Demand for its GPUs remains high, with sales surging 78% year-over-year in the fourth quarter of fiscal 2025 (ending January 26), totaling $39 billion. The company anticipates a 65% sales increase in the first quarter of fiscal 2026, driven by strong interest in its latest AI product line, Blackwell.

Management highlights the vast opportunities for its technology, now spanning diverse industries beyond just internet and technology. Notably, the this includes increasing demand for GPU-driven data centers—termed AI factories—which are transforming traditional data center operations. This shift is expected to expand the data center market from $1 trillion to $2 trillion; data centers currently account for 88% of Nvidia’s revenue.

However, emerging competition from major tech firms like Amazon and Apple, which are developing their own specialized GPUs at lower costs, may challenge Nvidia’s market share and pricing power. Although the opportunity within the sector is growing, Nvidia’s slice of that pie may not expand correspondingly.

Furthermore, Nvidia’s current valuation is worth considering. It trades at a forward one-year P/E ratio of 24, potentially signaling that the market expects slowing growth. A decrease in share price might indicate that the market is anticipating increased competition and market saturation.

Conversely, if Nvidia continues its rapid growth, the stock may be undervalued. This gap between market perception and actual performance could benefit patient investors over the next three years.

Investing Insights and Opportunities

Investors may feel they’ve missed opportunities with successful stocks in the past. Monitoring key alerts and recommendations can potentially reveal lucrative entry points.

For instance:

• Nvidia: If you invested $1,000 when we doubled down in 2009, you’d have $351,127.
• Apple: If you invested $1,000 when we doubled down in 2008, you’d have $40,106.
• Netflix: If you invested $1,000 when we doubled down in 2004, you’d have $642,582.

see the 3 stocks »

The opinions and viewpoints presented here belong to the author and do not necessarily represent the views of Nasdaq, Inc.