Why Now Is the Time to Buy Nvidia Stock Amid Market Fluctuations
During market sell-offs, watching your investment portfolio decline can be distressing. High-growth stocks, in particular, like Nvidia (NASDAQ: NVDA), often bear the brunt of this volatility, leading to panic among investors.
However, reactions driven by fear may be misplaced. Nvidia may experience a decline in demand, similar to many companies, but it benefits from significant tailwinds in the AI sector. This situation suggests that now is the time to buy rather than sell.
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High Demand for Nvidia’s GPUs
Nvidia dominated the market from 2023 to 2024, emerging as a leader in the AI arms race by providing graphics processing units (GPUs) essential for high-computing tasks such as AI models. Clients have built expansive data centers, some featuring over 100,000 GPUs, yet demand continues to rise.
Prominent AI companies indicate that the computing power required for advanced generative AI models increases with each new version, favoring Nvidia’s prospects. At the 2025 GTC event, CEO Jensen Huang forecasted that data center capital expenditures could hit $1 trillion by 2028, a major increase from $400 billion in 2024. Given Nvidia’s trailing revenue of $130 billion, it stands to gain significantly from this trend.
Yet, broader economic concerns overshadow Nvidia’s potential. Fears about tariffs from President Donald Trump are causing worries about a possible recession impacting Nvidia and its peers. However, it’s crucial to recognize that trends such as AI often transcend economic pressures. Nvidia’s major clients have substantial cash flows that, while perhaps slightly pressured, are unlikely to vanish completely.
Competing in the AI arms race is vital. Generative AI represents a groundbreaking technological advancement since the advent of the internet, and a robust AI capabilities will be crucial for companies to remain viable in the coming years.
By focusing on the long-term outlook—at least five years—I can overlook the present-day fears that some may deem legitimate. Nvidia’s trajectory remains upward, even if its stock price currently does not reflect this growth.
If short-term stock fluctuations worry you, remember you purchased Nvidia for its GPUs—key drivers behind the long-term development of AI.
For those willing to take a bolder approach, this moment appears to be an excellent buying opportunity.
Nvidia’s Stock Price Is Becoming Attractive
Following the recent market sell-off, Nvidia’s stock prices have declined to levels not witnessed in quite some time.
NVDA PE Ratio (Forward) data by YCharts
Currently, Nvidia’s price-to-earnings (P/E) ratio is at its lowest since 2023 and has not been this low for forward P/E since early 2024. This is significant, given the general market pessimism at that time centered around recession fears.
When comparing Nvidia’s stock to the broader S&P 500 index, it becomes even more appealing. The S&P 500 trades at a forward P/E of 20, making Nvidia’s stock only slightly higher than the market average. This is notable since Wall Street anticipates Nvidia’s revenue growth of 56% this year and 23% next year—much higher than the typical growth seen across the broader market, indicating optimism for long-term investors.
While immediate economic anxieties may be daunting, investors should prioritize the long-term perspective. Recognizing that numerous stocks are currently undervalued, including Nvidia, presents a strong opportunity.
Is Nvidia a Worthwhile Investment Right Now?
Before proceeding with purchasing Nvidia Stock, it is essential to consider some factors:
The Motley Fool Stock Advisor analyst team has identified what they believe to be the 10 best stocks for investors today—Nvidia was not included in this selection. These 10 stocks are expected to yield significant returns in the years ahead.
For instance when Netflix made this prestigious list on December 17, 2004, a $1,000 investment then would now be worth $509,884! Similarly, after Nvidia was recommended on April 15, 2005, a $1,000 investment would have grown to $700,739!
Importantly, it’s worth noting that the Stock Advisor program has a total average return of 820%—a substantial outperformance compared to 158% for the S&P 500. Don’t miss out on their latest top 10 list, available upon joining Stock Advisor.
*Stock Advisor returns as of April 10, 2025
Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
