Is Nvidia stock too cheap to ignore?

nvidia (NVDA) 1.92%)) It has become a stock market giant thanks to its dominance in artificial intelligence (AI), one of today’s highest growth markets. This says analysts are heading towards $1 trillion by the end of the decade. Tech companies have actually built an empire of AI products and services, including hardware, software, networking tools, and more, to serve all AI customers along every step of their AI journey. CEO Jensen Fan calls “lamp” “on lamps” in the world of AI.

Nvidia’s Crown Jewel is a graphics processing unit (GPU). This is the fastest chip around power-critical AI tasks such as model training and guessing. Customers, including Microsoft and Amazon, the world’s largest high-tech companions, have rushed to Nvidia for their latest products, helping the company generate billions of dollars in revenue. In fact, in the recently closed fiscal year, Nvidia reported a triple-digit increase in revenue to a record $130 billion.

Stocks continued, up 1,500% over five years. The downside of all these is that at certain points, Nvidia’s stock was traded at a level that many investors consider to be expensive. But so did Nvidia and its valuation, as stocks have declined over concerns about the general economy. In fact, stocks are traded at the lowest in relation to estimates of positive earnings over a year. Is the stock too cheap to ignore? Let’s look into it.

Image source: Getty Images.

Nvidia’s path from games to AI

First, a brief summary of previous Nvidia stories. This high-tech superstar has not always been the center of the market attention. In previous eras, it was primarily useful for the video game industry with GPUs, but it became clear that these chips could be useful elsewhere, so Nvidia developed the parallel computing platform CUDA to make it happen.

And when GPUs start serving the AI ​​community, the rest is history. AI customers are gathering at Nvidia for these top-performing chips. There is a good example of their popularity from comments from Larry Ellison, co-founder of Oracle last year. He said he and Tesla chief Elon Musk served nvidia’s huang for dinner and “please” him for more tips. This is because of high demand for products. In fact, demand for the company’s latest innovation, Blackwell architecture, is incredibly high, he told CNBC in an interview a few months ago.

The company’s recent revenue call said Blackwell had generated $11 billion in revenue in the market in the first quarter. At the same time, launching such complex customizable products is costly, but Nvidia can exceed 70% of its total margin, indicating that it is profitable in sales.

Nvidia’s recent headwinds

However, in recent weeks, Nvidia’s stock has faced many headwinds. First, as Startup Deepseek announced it had trained Nvidia’s low-cost GPU model, investors worried others might continue, leading to a potential decline in Nvidia’s revenue. The Trump administration’s intention to stick to and perhaps strengthen control of chips to China has since proved another challenge for Nvidia. Finally, President Trump’s launch of tariffs on imports from three major trading partners has deepened concerns about economic growth and the revenues of companies that manufacture goods outside the US, such as Nvidia.

As a result, Nvidia shares have slipped around 14% over the past month. And this has ruined the valuation – Nvidia is currently trading on a 24x advance revenue estimate, the cheapest level in over a year.

Is Nvidia stains cheap today?

Now, let’s go back to our question. Is Nvidia too cheap to ignore, or is it a headwind that states why it puts the brakes on buying this AI player? Well, the Deepseek issue may have been dissipated as a recent major Nvidia client spoke about AI investment plans. In fact, AI spending is skyrocketing. For example, Metaplatform intends to spend up to $65 billion on scaling up this year, and is set to finish the year with 1.3 million GPUs.

Regarding chip export restrictions, since it was implemented in 2022, we have been comparing Nvidia’s revenues in China.

Finally, let’s consider Trump’s tariffs. They were able to weigh Nvidia and many other US companies, but it is important to note that the current trade war is a temporary challenge. And Trump has delayed tariffs on products contained in the US-Mexico-Canada agreement, suggesting that there may be some flexibility in implementing it.

Looking at nvidia, specifically, all the major signs look positive. The company’s focus on blowout revenue quarter reported after the quarter and market leadership and innovation suggests that it could last for quite some time. All this means, at today’s prices, Nvidia is too cheap to ignore and looks like a screaming purchase to long-term investors.