NVIDIA Regains Its Lost Glory - Should You Buy on the Dip and Hold?
NVIDIA Corp. NVDA — the undisputed global leader of the generative artificial intelligence (AI)-powered graphical processing units (GPUs) — regained the crown of the world's most valuable company in terms of market capital.
On June 25, the stock price of NVDA closed at an all-time high of $154.31, with a market capital of $3.763 trillion, surpassing one of its major client Microsoft Corp. 's MSFT market capital of around $3.66 trillion.
NVIDIA recorded its previous all-time high of $149.41 at January end. Thereafter, the stock fell significantly due to the unveiling of the low-cost Chinese DeepSeek AI platform, the Trump administration's decision to stop the export of NVDA's high-end H20 AI processor to China and global turmoil related to trade after President Trump imposed reciprocal tariffs.
The stock price recorded its recent low in early April. From there, it surged nearly 80% with a year-over-year gain of more than 15%. The recent rally of NVDA is highly commendable despite the fact that the company warned last month that export restrictions would cost it $8 billion in sales and a $4.5 billion inventory write off. NVIDIA is no longer counting any sales from China.
Innovation, Evolution and Execution
NVIDIA reaffirmed its commitment to continued innovation, evolution and execution. After the successful execution of Hopper GPUs, NVDA's Blackwell GPUs have already seen a record high units sold to cloud providers.
NVIDIA is expected to unveil Blackwell Ultra — in the second half of 2025 and begin shipping of Vera Rubin — in 2026. In addition, the company decided that it will announce its roadmap for Rubin Next — to be introduced in 2027 and Feynman AI chips in 2028.
NVIDIA is supported by an extremely bullish demand scenario. Four of the 'magnificent 7' stocks have decided to invest a massive $325 billion in 2025 as capital expenditure for AI-infrastructure development. This marks a significant 46% year-over-year increase in capital spending on the AI ecosystem.
Apart from Microsoft, other giant customers are Alphabet Inc. GOOGL, Meta Platforms Inc. META and Amazon.com Inc. AMZN. This huge spending on AI infrastructure will dramatically change the world in the next five years in fields like hyperscale automation, robotics, healthcare, energy, materials, financials and cybersecurity. Research firm Oppenheimer estimated that the total addressable global sovereign AI market could be a massive $1.5 trillion.
Leveraging on Reasoning AI Models
The major innovation for NVDA's new chipsets is a qualitative shift from pureplay generative AI models to reasoning AI models. NVIDIA's CEO Jensen Huang, said that contrary to the market's belief that DeepSeek is a major threat to NVDA's high-cost chips, it has actually opened a huge growth opportunity for his company.
According to Huang, 'DeepSeek's R1 AI model the first open-sourced reasoning model. This reasoning AI consumes 100 times more compute than a non-reasoning AI.' OpenAI's o1 and Alphabet's Gemini 2.0 Flash Thinking are also reasoning models.
Huang said that AI chips with faster speed will be the best option for companies that opt for reasoning AI-based infrastructure to save costs and maximize returns. In this regard, NVDA's upcoming Blackwell Ultra chips are expected to provide data centers 50 times more revenue than its Hopper systems, buoyed by their superfast AI servicing capabilities to multiple users.
Visionary Diversification
Aside from the robust business of data centers and gaming, the automobile industry, especially the self-driving and new energy vehicles, is turning out to be the next catalyst. NVIDIA unveiled new AI infrastructure for robotics.
In the last reported first-quarter of fiscal 2026, automotive revenues jumped 72% year over year to $567 million. NVDA is expecting automotive segment revenue to cross $5 billion in fiscal 2026. CEO Jensen Huang is highly optimistic as this business could become a multitrillion-dollar opportunity in the future.
Excellent Estimate Revisions for NVDA Stock
NVIDIA has an expected revenue and earnings growth rate of 51.4% and 42.1%, respectively, for the current year (ending January 2026). The Zacks Consensus Estimate for current-year earnings has improved 1.7% in the last 30 days.
It has an expected revenue and earnings growth rate of 25.2% and 31.8%, respectively, for next year (ending January 2027). The Zacks Consensus Estimate for next-year earnings has improved 0.4% in the last seven days.
NVDA has a long-term (3-5 years) EPS growth rate of 28.2%, significantly above the S&P 500 Index's 12.6% growth rate.
NVIDIA has a return on equity (ROE) of 105.09% compared with the S&P 500's ROE of 16.92% and the industry's ROE of a mere 4.95%. It has a current net margin of 51.69% compared with the industry's net margin of 6.67% and the S&P 500's net margin of 12.40%. NVDA has a forward P/E (price/earnings) of 34.84% compared with the industry's P/E of 37.09% and the S&P 500's P/E of 18.98%.
Investment Thesis for NVDA Shares
NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. NVIDIA represents a rare opportunity to invest in a company with proven execution and substantial unrealized potential in the AI revolution.
At this stage, it will be prudent to buy NVDA on every dip. Hold this stock for the long term as the company's strong execution of the last several quarters and robust future projections will generate more value. Consequently, the stock price of NVIDIA should witness an attractive upside.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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