Is this the ultimate US growth stock to consider buying now?
When it comes to the best US growth stocks to buy, most investors have had their sights on Nvidia (NASDAQ:NVDA). The graphic processing unit (GPU) chip designer has created some of the most powerful artificial intelligence (AI) accelerator semiconductors that data centres worldwide have rushed to buy, even at an enormous premium price tag. And as a result, the Nvidia share price has skyrocketed by over 1,400% in the last five years.
However in 2025, this impressive momentum's seemingly started to calm. In fact, since the start of the year, Nvidia shares have actually fallen by around 3% – a significant change, of course, compared to the 120% gain achieved over the same period last year. And that's despite Nvidia's growth continuing to fire on all cylinders.
So if the financials are still improving, but the share price isn't responding, are investors looking for a potential buying opportunity?
There are 64 institutional investors tracking this business right now. And the consensus is pretty bullish, with 58 issuing either Buy or Outperform recommendations. As for price targets, the average forecast among analysts is $175 per share by this time next year – or roughly 30% higher than current levels.
For a $3.3trn enterprise, a 30% potential gain's pretty enormous. But it certainly doesn't sound far-fetched. After all, Nvidia currently controls around 80% of the AI chip market, forming the backbone of global AI infrastructure. And with new AI as well as gaming chips on the horizon, the company's market dominance looks set to continue.
Looking at the latest first-quarter earnings report, sales were firmly ahead of analyst expectations at $44.06bn, with the all-important data centre-related sales growing by 73% year-on-year. Pairing that with continued excessive free cash flow generation and chunky profit margins, it's not hard to understand why analysts are so bullish, especially with AI still largely in its infancy.
Despite delivering 73% data centre sales growth, this was actually slower than what the firm could have delivered if it wasn't for US export restrictions on China. Specifically, the company was unable to deliver $2.5bn worth of its H20 chips to China, resulting in a $4.5bn charge relating to excess inventory and purchase obligations.
With demand from China not expected to return while the export restrictions remain in place, management's warned that data centre-related revenues in the second quarter will suffer an $8bn hit.
The good news is there's ample demand from non-China-based customers to offset this impact in the long run. The bad news is most of the group's sales are to a small collection of hyperscalers like Microsoft, Amazon, and Meta Platforms. And should any of these decide their AI infrastructure is sufficiently upgraded or decide to switch to competing cheaper AI chips from the likes of AMD, Nvidia's strong grip on the AI market could start to weaken.
Despite the trade-related challenges Nvidia's having to navigate, it remains the industry titan. Its high-performance hardware's backed up by world-class software in the form of its CUDA libraries – a technological advantage that its peers simply don't have. That doesn't mean the firm's immune to disruption. But with shares now trading at a reasonable valuation, it's a stock that definitely seems worthy of a closer look, in my opinion.
The post Is this the ultimate US growth stock to consider buying now? appeared first on The Motley Fool UK.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Advanced Micro Devices, Amazon, Meta Platforms, Microsoft, and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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