It seems reality is finally catching up with Nvidia (NVDA), which has seemed unstoppable since artificial intelligence euphoria began in 2023. The stock, which gained almost 240% in 2023 and 171% in 2024, is down 19% for the year.
NVDA stock has lost over 26% from its record highs, and the drawdown is the second worst among “Magnificent 7” companies, with Tesla (TSLA) being the worst performer.
Over the last couple of years, buying the dip in Nvidia has worked well for investors, and the stock has quickly rebounded to hit new record highs. Nvidia became a $3 trillion behemoth last year and briefly took the crown of the world’s biggest company, outranking both Microsoft (MSFT) and Apple (AAPL).
Now, Nvidia’s market cap has fallen below $3 trillion, making it the third-largest company. In this article, we’ll discuss whether the worst is over for NVDA stock or if more downside lies ahead.
Troubles Keep Coming for Nvidia
In a previous article, I had listed the weaknesses in broader markets, trade war fears, the unravelling of AI trade, and high valuations in the light of these negatives as factors for staying away from NVDA stock. Troubles have since continued to compound for Nvidia, and the stock has reacted accordingly.
The most recent headwind for Nvidia is related to its unofficial sales to China, where it is barred from shipping some of its high-power chips. In fiscal 2025, Singapore accounted for 18% of its revenues based on “customer billing location.” However, the revenues from products shipped to the tiny country were a mere 2%.
In its annual report, Nvidia said, “Customers use Singapore to centralize invoicing while our products are almost always shipped elsewhere.” The problem here is that the “elsewhere” might be China in some cases. There are genuine fears that some Nvidia chips found their way to China through this route.
President Donald Trump, who has taken a hard stance on China and doubled the additional tariffs on Chinese imports to 20% within the first two months of his presidency, might clamp down on Nvidia’s exports to China. The Jensen Huang-led company has already warned that it is losing its competitive edge in China and, during its fiscal Q4 2025 earnings call, said that its data center sales in the country as a percentage of its total Data Center revenues “remained well below levels seen on the onset of export controls.”
NVDA Stock Forecast: Analysts Remain Bullish
Despite the troubles, sell-side analysts remain quite bullish on Nvidia. While Summit Insights Group downgraded the stock from a “Buy” to “Hold” earlier this month, the overall Street sentiment remains overtly bullish. Of the 44 analysts actively covering Nvidia, 38 have a “Strong Buy” rating, while two rate it as a “Moderate Buy.” The remaining 4 rate NVDA as a “Hold” or some equivalent. Nvidia even trades below its Street-low target price of $130, while the mean target price of $177.59 is over 57% higher than the March 7 closing price.
Is NVDA Stock a Buy Now?
I would argue that valuing Nvidia is a conundrum in itself. Nvidia trades at just about 27x its expected earnings over the next 12 months. Only Alphabet (GOOG) and Meta Platforms (META) trade at a lower multiple than Nvidia among the Magnificent 7. When it comes to the P/E-to-growth (PEG) multiple, Nvidia beats Big Tech companies hands down, as the chip designing giant’s top line and bottom line are expected to grow by roughly 50% in the current fiscal year.
However, this is where the conundrum begins. Nvidia’s revenue and profit growth is expected to more than halve to around 23% in the next fiscal year. There remains uncertainty over how long tech companies will keep buying Nvidia’s chips, as AI capex might peak over the next couple of years. Moreover, hyperscalers like Amazon (AMZN) are designing custom silicon, which would mean they need fewer Nvidia chips. We are not yet factoring in any possible recession or a slowdown, which might force tech companies to curtail their AI capex. Notably, since the Data Center segment now accounts for the bulk of Nvidia’s revenues, given its sheer size, other segments might not be able to compensate for any slowdown in that segment.
Overall, while I find Nvidia’s risk-reward getting better after the recent crash, I won’t be surprised to see the stock trade weakly for some more time and dip closer to the $100 price level. One near-term trigger could be the upcoming GTC 2025 conference from March 17 to March 21, which includes the “Quantum Day” on March 20. I recommend remaining on the sidelines for now and would wait for more tempting prices before buying NVDA stock.
On the date of publication, Mohit Oberoi had a position in: NVDA, TSLA, META, GOOG, AAPL, MSFT, AMZN. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.