Is Now Still a Good Time to Buy Nvidia Amid Its Record Surge?

NVIDIA’s stock has surged to record highs in 2025, with a market capitalization surpassing $4.43 trillion and a trailing P/E ratio of 47.18 as of September 2025 [2]. This valuation, while lower than the company’s 10-year average of 52.17 [3], still exceeds the U.S. semiconductor industry’s average P/E of 31.4x [4]. The question for investors is whether this premium is justified by the company’s long-term prospects in AI infrastructure, or if short-term valuation concerns outweigh its growth potential.

Short-Term Valuation: A Premium on Earnings

NVIDIA’s Q2 2025 results underscored its dominance in the AI era. Revenue of $46.7 billion—$600 million above estimates—reflected 56% year-over-year growth in data center sales, driven by demand for AI training and inference chips [1]. The stock’s 0.18% post-earnings rally to $182.10 signaled investor confidence, but the P/E ratio of 57.81 during the quarter [1] remains a point of scrutiny. While this has since cooled to 47.18 [2], it still implies investors are paying a significant multiple for earnings relative to historical norms and industry peers. For context, ON Semiconductor’s P/E of 45.05 [3] and the semiconductor sector’s 39.1x average [4] suggest NVIDIA’s valuation is not an outlier but reflects broader optimism about tech’s future.

Long-Term AI Infrastructure Growth: A $3 Trillion Opportunity

The case for NVIDIA hinges on the explosive growth of AI infrastructure. According to Mordor Intelligence, the AI infrastructure market is projected to expand from $87.6 billion in 2025 to $197.6 billion by 2030, a 17.71% CAGR [1]. ResearchAndMarkets forecasts an even steeper 19.4% CAGR, with the market reaching $394.46 billion by 2030 [4]. Meanwhile, McKinsey estimates that $6.7 trillion in capital expenditures will be required for AI-related data centers by 2030, with NVIDIA positioned to capture a significant share [5].

NVIDIA’s competitive moat is evident in its 85% market share of AI accelerators, fueled by its CUDA ecosystem and cutting-edge H100 and Blackwell chips [4]. The company’s Q3 2025 revenue guidance of $54 billion—up 15% from Q2—reflects sustained demand, with a 12-month product backlog [5]. Analysts project that NVIDIA could capture 25–30% of a $1 trillion data center total addressable market (TAM) by 2028 [5], translating to a $250–300 billion revenue opportunity.

Balancing Risks and Rewards

Despite these tailwinds, risks loom. AMD and Intel are closing the gap in AI chip performance, while regulatory scrutiny over market concentration could intensify [1]. Additionally, gross margins near 73% [1] may face pressure as competition heats up and pricing dynamics shift. However, NVIDIA’s $60 billion stock buyback program [3] and robust free cash flow generation—supported by 75.89% return on assets [1]—underscore management’s confidence in navigating these challenges.

Conclusion: A Calculated Bet on the AI Revolution

For long-term investors, NVIDIA’s valuation appears justified by the scale of the AI infrastructure opportunity. While a P/E of 47.18 [2] may seem elevated, it aligns with the projected $3 trillion AI market over the next five years [5]. The company’s leadership in GPUs, software ecosystem, and product pipeline—such as the Blackwell platform—position it to outperform peers even in a more competitive landscape. That said, the stock’s current price reflects high expectations, and near-term volatility is likely. Investors must weigh their risk tolerance against the conviction that NVIDIA’s dominance in AI will endure.

**Source:[1] Earnings call transcript: NVIDIA Q2 2025 [https://www.investing.com/news/transcripts/earnings-call-transcript-nvidia-q2-2025-strong-earnings-beat-drives-stock-uptick-93CH-4213615][2] NVDA - Nvidia PE ratio, current and historical analysis [https://fullratio.com/stocks/nasdaq-nvda/pe-ratio][3] U.S. Semiconductors Industry Analysis [https://simplywall.st/markets/us/tech/semiconductors][4] AI Infrastructure Market Size & Share Analysis [https://www.mordorintelligence.com/industry-reports/ai-infrastructure-market][5] The cost of compute: A $7 trillion race to scale data centers [https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-cost-of-compute-a-7-trillion-dollar-race-to-scale-data-centers]