Nvidia: Harnessing AI Boom Amidst Weakness

Nvidia's stock price has risen 22% to $174 since June, despite being considered not cheap. The company has room to run due to its strong position in the AI market. The author rates Nvidia a Buy and advises investors to add to weakness and ride the AI boom.

Nvidia's stock price has risen by 22% to $174 since June, despite being considered not cheap. The company's strong position in the AI market has led to this significant increase, driven by its dominant position in AI accelerators and data centers [1]. Despite recent challenges, Nvidia's leadership in AI infrastructure and robust research and development (R&D) position the company for continued growth.

Nvidia's Q2 2025 revenue surged to $46.7 billion, with 88% of this driven by its data center segment, fueled by the Blackwell AI platform. The Blackwell architecture, up to 30 times faster than prior generations in certain workloads, has solidified Nvidia's 80% market share in AI accelerators [1]. Analysts have raised price targets to $215–$230, citing robust demand for Blackwell and H20 chips, despite regulatory hurdles [1].

However, Nvidia faces geopolitical risks, particularly in China. U.S. export controls have cost the company $2.5 billion in lost sales, with the 15% remittance on H20 chip sales further complicating its strategy [1]. The delayed Rubin chip, a key next-generation product, also poses a challenge, pushing shipments to 2026 [1]. Competitors like AMD and Intel are closing the gap, while cloud providers such as AWS and Microsoft are diversifying their hardware portfolios [1].

Despite these challenges, Nvidia's CUDA ecosystem and strategic alignment with U.S. industrial policy provide a moat against these threats [1]. The company's ability to scale Blackwell production and its focus on AI-as-a-Service models enhance customer stickiness [1]. Additionally, Nvidia's $60 billion share buyback program signals confidence in long-term growth, but it raises concerns about capital allocation away from R&D and supply chain investments [1].

In conclusion, while Nvidia faces short-term challenges, its leadership in AI infrastructure, robust R&D, and strategic adaptability justify the elevated price targets. Investors should consider adding to Nvidia's stock, particularly during periods of weakness, to ride the AI boom.

References:
[1] https://www.nasdaq.com/articles/prediction-1-artificial-intelligence-ai-stock-will-be-worth-more-nvidia-and-palantir
[2] https://www.ainvest.com/news/nvidia-ai-dominance-price-target-hike-q2-earnings-assessing-sustainability-growth-geopolitical-data-center-challenges-2509/