Nvidia (NASDAQ:NVDA) is beginning to realize that the weight of expectations can be a huge burden.
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Last month, the leading AI chipmaker once again beat both revenue and profit estimates in its 2025 third-quarter report. However, the reaction in the market, which now treats the extraordinary as normal, was slow, and the stock price fell slightly in the days that followed.
Investors may also have been spooked by Nvidia’s lower gross margins related to the transition to Blackwell, the prospect of rising U.S.-China tensions, or perhaps even larger macro concerns about AI market saturation. .
But Yiannis Tsurpanos, a top investor in the top 1% of TipRanks stock pros, is unfazed by recent performance. For him, it’s all part of the bigger picture.
“This pullback represents a healthy period of consolidation, providing the necessary pause for stocks to absorb recent gains and establish a stronger base of support,” said 5-Star Investing. The house commented.
Zumpanos points to several reasons for this bullish view. For one, the data center division continues to serve as a tremendous growth engine for the company, with “accelerated performance and adoption of Hopper and Blackwell GPUs” further evidence of the company’s pole position in the AI revolution. .
Blackwell’s operating expenses have slightly reduced profit margins, but investors expect full accretion to stabilize profit margins in the mid-70s.
“This continued top-line boom with gross margins of +70% is good for the stock from a valuation perspective,” Zulpanos added.
Investors are also not concerned about the disruption of a potential trade war between the U.S. and China, as NVIDIA continues to diversify its revenue streams around the world, including major partnerships in India and Japan. .
On valuation, NVIDIA’s price-to-earnings multiple of 55 times stands out, but Zourmpanos says the stock still offers an impressive 1,744.91% premium to future earnings.
“This divergence between current valuations and high growth premiums suggests the potential for significant upside in the coming quarters,” the investor asserts.
Zolpanos rates NVDA stock a “strong buy” as the long-term outlook “remains attractive.” (Click here to see Zourmpanos’ track record)
Wall Street analysts are also fully on board. NVDA boasts a consensus Strong Buy rating with 37 Buy ratings and 3 Hold ratings. The average 12-month price target is $176.14, which translates to a ~22% return. (See NVDA stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
