Nvidia Stock Is Down 20%. Is It Time to Buy the Dip on the AI Leader?

3 weeks ago 9

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Howard Smith, The Motley Fool

Sun, Mar 16, 2025, 3:44 PM 4 min read

Well, not exactly. Late past month, Nvidia reported fourth-quarter and full-year net for its fiscal 2025 period, which ended Jan. 26. The quality was good, not bad. Nvidia impressed analysts and investors erstwhile again by exceeding some top- and bottom-line estimates. Guidance called for different leap successful gross successful the existent 4th to a grounds $43 billion. So, let's look astatine what has the banal plunging successful 2025.

Some of the aforesaid things that person driven the Nasdaq Composite into correction territory person caused fearfulness and uncertainty astir Nvidia stock. The Trump medication has announced -- and changed -- respective applications of import tariffs that could impact Nvidia's business. On apical of that, nationalist information concerns person raised the prospects for much export restrictions connected Nvidia's almighty artificial quality (AI) chips.

The tariffs themselves could person some nonstop and indirect implications for Nvidia. There are concerns that tariffs could hinder economical maturation and make an inflationary environment. Either of those situations could negatively interaction semiconductor spot sales. After all, if a institution gathering retired information halfway capableness believes returns connected investments volition beryllium impacted, it whitethorn precise good trim oregon hold those investments.

Nvidia's stock terms skyrocketed implicit the past 18 months arsenic investors forecast awesome gross maturation to continue. It's been thing abbreviated of amazing. Sales began to soar successful 2023. Revenue jumped 126% successful fiscal 2024, ending Jan. 28, 2024. It didn't dilatory down successful fiscal 2025, either. Growth of different 114% for that play ended this January, and the banal continued to tally higher.

That is, until recently.

The 22% driblet from its January precocious people mightiness conscionable beryllium a large accidental for those who feared they missed retired connected owning Nvidia stock. As of this writing, it was trading astatine a price-to-earnings (P/E) ratio of conscionable astir 25 based connected calendar twelvemonth 2025 earnings. That's beauteous charismatic compared to the 10-year mean P/E of 32 for the Nasdaq-100 index.

That's its lowest level since net estimates skyrocketed aboriginal past year. The banal itself has much than doubled since the commencement of 2024.

Nvidia inactive has plentifulness of opportunities for growth. Barring immoderate large improvement of a commercialized warfare oregon recession, gross should summation astir 50% this year. That's mostly driven by the Blackwell AI architecture, which is present successful afloat production. There are galore concern improvement possibilities beyond that.