Nvidia shares have hit a bumpy road at the start of this year, and for those who have been keeping an eye on NASDAQ: NVDA, it’s been a bit of a rollercoaster. As it stands, the stock has slid down roughly 12% year-to-date and has taken a 20% downturn from its January peak. Surely, the company’s performance must be falling short, right?
Actually, that’s not the case. At the end of last month, Nvidia unveiled its fourth-quarter and full-year financial results for fiscal 2025, closing on January 26. The news was anything but disappointing. Once again, Nvidia managed to wow both analysts and its investors by surpassing expectations for revenue and earnings. They’ve set their sights high for the current quarter, with projections of a record $43 billion in revenue. So, what exactly is driving the stock downwards in 2025?
Market Correction: An Opening
Much like what has been dragging the Nasdaq Composite into a state of correction, Nvidia, too, has felt the ripples of fear and doubt. The Trump administration’s announcement of shifting import tariffs poised to affect Nvidia’s market hasn’t helped either. Coupled with security concerns that push the notion of potential export restrictions on Nvidia’s cutting-edge AI chips, anxiety has sprouted.
The ramifications of such tariffs could ripple through Nvidia’s operations directly and indirectly. There’s unease that these tariffs might stifle economic growth and stir up inflation. Both scenarios spell trouble for sales in semiconductor chips. Consider this: if firms think their data center investments won’t yield desirable returns, they may opt to scale back or postpone their investment plans.
Over the last year and a half, Nvidia’s stock price enjoyed a meteoric rise, fueled by investor confidence in sustained revenue expansion—a sentiment that proved justified. Sales soared astonishingly in 2023, seen by the 126% revenue spike in fiscal 2024, ending January 28, 2024, and showed no signs of deceleration into fiscal 2025, which ended with yet another 114% leap in revenue growth this January. The stock has been on a bull run—that is, until it suddenly wasn’t.
Nvidia Investors: Keep Calm
The 22% dip from its January zenith might prove to be an unwarranted concern for those hesitant they’d missed the Nvidia train. Right now, Nvidia’s trading at a price-to-earnings (P/E) ratio around 25, based on calendar year 2025 projections. This is notably alluring when you lay it next to the Nasdaq-100 index’s decade-long average P/E of 32.
What’s more, this is the stock’s lowest point since last year’s estimation surge. Since 2024 began, Nvidia’s stock has more than doubled its value.
NVDAs PE Ratio (Forward) data courtesy of YCharts
Forecasts show ample space for Nvidia’s growth spurt. If major geopolitical skirmishes or economic downturns remain at bay, we could see a healthy 50% uptick in revenue, primarily driven by the fully operational Blackwell AI architecture. Add in other business ventures, and the horizon looks promising.
Nvidia’s Pervasive Reach
Following Blackwell, the Rubin platform is set to bring even more potent AI capabilities to the table. But Nvidia’s prowess in AI stretches far beyond just bolstering data center capabilities. Companies innovating in the field of autonomous vehicles (AV) are snapping up Nvidia’s products to enhance their training processes. According to Nvidia, all of the top 30 AV data centers lean on its technology.
On the gaming front, revenue matured past the $11 billion mark last year, with more than 200 million gamers and creators worldwide hinging on Nvidia’s GeForce GPUs. And in the healthcare imaging AI sector, its Monai open-source framework has caught the attention of millions of developers. Robotics, with its potential to ramp up business efficiencies, could be the jackpot. Nvidia boasts over 1.3 million developers working with their Jetson platform for various high-performance tasks, from robotics to generative AI.
Nvidia has its hands in numerous pots. Even with a projected slowdown in revenue growth to roughly 50% this year, its AI chips and software collections remain unrivaled and ever-evolving. With various other segments lined up and a fair market valuation recently, buying the dip in Nvidia stock seems like a savvy move.
