Did Nvidia’s stock become too cheerful to ignore?

Nvidia (Nvda 1.92%)) has become a scholarship giant thanks to its domination over one of the highest growing markets: artificial intelligence (AI), a market of $ 200 billion which, according to analysts, is heading around 1 dollars by the end of the decade. The technological company has practically built an empire of AI products and services, including hardware, software, networking tools, etc. – To serve all AI customers at each stage of their AI journey. The chief executive, Jensen Huang, even described the company “on a ramp” in the world of AI.

And the jewel of the Crown of Nvidia is its graphic processing units (GPU), the fastest fleas around these crucial power tasks IA such as the formation and inference of models. Customers, including the largest technological firm in the world, Microsoft And AmazonTo rush to NVIDIA for its latest products, helping the company bringing billions of dollars in income. In fact, in recently closed fiscal year, Nvidia said a three -digit gain at more than $ 130 billion, a record.

The shares have followed, soaring 1,500% over five years. The drawback of all this is, at some point, that Nvidia’s shares have negotiated at levels that many investors considered. However, in recent weeks, actions have decreased on concerns about the general economy, NVIDIA – and its evaluation. In fact, the action is negotiated at the lowest compared to the estimates of term profits in more than a year. Did the stock become too cheerful to ignore? Discover.

Image source: Getty Images.

The Nvidia path of the game at AI

First, a quick summary of Nvidia’s story so far. This technological superstar was not always the center of market attention. In his first days, he mainly served the video game industry with his GPUs – but as it has become clear that these chips could be useful elsewhere, Nvidia has developed the Cuda parallel computer platform to get there.

And when the GPUs began to serve the AI ​​community, well, the rest belongs to history. AI customers have flocked to Nvidia for these most efficient chips, and here is a good example of their popularity, of Oracle The commentary on the co-founder Larry Ellison last year. He said he and Tesla Chef Elon Musk released Huang from Nvidia for dinner and “begged him” for more tokens. Indeed, the demand for the products is high. In fact, the request for the latest innovation of the company, The Blackwell Architecture, was so high that it reached “crazy” levels, told Huang to CNBC in an interview a few months ago.

In the company’s recent call for results, he said that Blackwell had generated $ 11 billion in revenue during his first quarter on the market. And at the same time, although the launch of such a complex customizable product is expensive, Nvidia has always been able to maintain a gross margin over 70%, showing high profitability on sales.

The recent opposite winds of Nvidia

In recent weeks, however, the Nvidia stock has faced a number of opposite winds. First, as the start -up Deepseek announced that it had formed its model on the low -cost GPUs of Nvidia, investors feared that others could follow – leading to a potential drop in income for Nvidia. Then, the Trump administration’s intention to stick to – and perhaps even strengthen – export controls on china fleas turned out to be another challenge for Nvidia. Finally, The launch of President Trump’s prices On the imports of three key business partners, deepened concerns about economic growth and the profits of companies which, like NVIDIA, manufacture products outside the United States.

Consequently, Nvidia’s shares slipped around 14% in the last month. And this has reduced the evaluation – Nvidia is now only negotiated 24 times Extreme profits estimatesIt is the cheapest level for over a year.

Is Nvidia Dirt cheap today?

Now, let’s go back to our question: Nvidia is too cheap to ignore, or are the opposite winds mentioned for the brakes on the purchase This player has? Well, the Deepseek problem may have dissipated as NVIDIA major customers in recent times, have spoken of their IA investment plans – and there was no sign of reduction. In fact, IA expenses soar. Meta-platformsFor example, indicates that it intends to spend up to 65 billion dollars this year on its scaling and will end the year with 1.3 million GPUs.

As for flea export controls, they weighed on Nvidia’s income in China since they were implemented in 2022. However, Nvidia, as mentioned above, continues to report significant income as it excels in other parts of the world.

Finally, consider Trump’s prices. They could weigh on Nvidia and many other American societies, but it is important to keep in mind that current trade war is a temporary challenge. And Trump delayed prices on products included in the agreement of the United States-Mexico-Canada, which suggests that there could be a certain flexibility in their implementation.

Looking at Nvidia, in particular, all the main signs seem positive. The quarter of the results of the company’s reported eruption after the quarter, and its leadership on the market and focus on innovation suggest that could continue for a while. All this means that, at today, Nvidia is too cheerful to ignore and resembles a screaming purchase for long -term investors.