Is It Too Late to Buy Nvidia After an 82% Rally?

Nvidia (NVDA) has surged 82% in less than four months, fueled by a perfect storm of AI demand, geopolitical tailwinds, and unparalleled market momentum. As of July 19, 2025, the stock trades at $172.41, a 437% gain since May 2023 and a 1,000% jump since January 2023. With a $4.2 trillion market cap, it now dwarfs even Microsoft and Apple. But is this rally a buying opportunity or a bubble waiting to pop? Let's dissect the momentum, fundamentals, and AI-driven demand to determine if Nvidia still offers a compelling long-term entry point.

Momentum: A Rocket Ship Powered by AI and Policy

Nvidia's recent rally began in April 2025 amid a broader market selloff driven by Trump's tariff threats and fears of an AI spending slowdown. However, the stock rebounded sharply as Microsoft, Amazon, and Meta doubled down on AI investments, while the U.S. government greenlit resumed AI chip sales to China. These catalysts propelled the stock to a record $164.1 by July 10, 2025, adding $1.9 trillion to its market value in four months.

The momentum is rooted in Nvidia's dominance in AI infrastructure. Major cloud providers like Microsoft, Amazon, and Alphabet are projected to spend $260 billion on AI in 2025 alone, while Meta's $70 billion capex plan nearly doubles its 2024 spending. This spending spree is underpinned by Nvidia's H100 and Blackwell GPUs, which remain the gold standard for training large language models (LLMs).

Fundamentals: Sustaining the Storm

Nvidia's Q2 2025 earnings, released in July 2024, revealed a juggernaut in financial health. The company reported $30 billion in revenue, up 122% year-over-year, with Data Center revenue hitting $26.3 billion (154% growth). GAAP earnings per share were $0.67 (168% YoY), while non-GAAP earnings hit $0.68 (152% YoY). Operating income surged 174% year-over-year to $18.6 billion, and free cash flow reached $28.4 billion in the first half of 2025.

Despite rising operating expenses (up 48% YoY), Nvidia's gross margins remain robust at 75.1% (GAAP) and 75.7% (non-GAAP). The company also returned $15.4 billion to shareholders via buybacks and dividends, with an additional $50 billion in buyback authorization. With $8.6 billion in cash and $58.2 billion in shareholders' equity, Nvidia's balance sheet is a fortress.

However, the stock's valuation is staggering. At 33x forward earnings and a price-to-sales ratio of 15x, it trades at a premium to peers. Critics argue this reflects over-optimism, but given Nvidia's 122% YoY revenue growth and 74% gross margins, the math still works for long-term investors.

AI-Driven Demand: A New Era of Computing

The AI revolution is not a fad—it's a paradigm shift. Nvidia's CUDA ecosystem, with 4 million developers, locks in users with unparalleled software integration. Its Blackwell GPU, set for 2024, promises 10x the performance of the H100, cementing its leadership in AI training and inference.

Yet competition is intensifying. AMD's MI300X and Intel's Gaudi chips are gaining traction, with Meta already deploying MI300X for Llama 3/4. Google's TPUs and Amazon's Trainium are also eroding Nvidia's market share. AMD's data center revenue surged 57.2% in Q1 2025 to $3.67 billion, and Intel's Gaudi is priced 50% lower than H100, appealing to cost-conscious clients.

Still, Nvidia's moat remains formidable. Its 80% share of the AI accelerator market and 90% of data center GPUs give it pricing power. The recent U.S. policy shift to allow AI chip exports to China could unlock $15 billion in data center revenue. Meanwhile, open-source AI models from Hugging Face and Stability AI may reduce reliance on proprietary ecosystems, but they also drive demand for standardized, high-performance hardware—Nvidia's sweet spot.

The Verdict: Is It Too Late to Buy?

Nvidia's rally is justified by its role in the AI “gold rush,” but the question is whether it's overvalued. At $172.41, the stock trades at 33x forward earnings and 15x sales—a premium to the S&P 500's 25x and 1.5x, respectively. Yet, given its 122% YoY revenue growth and expanding margins, this multiple isn't unreasonable for a company growing at 30–40% annually.

Investment Advice:
1. Long-Term Holders: The AI revolution is decades-long. Even with 80% gains, Nvidia's dominance in data centers and AI infrastructure ensures it remains a core holding for investors seeking exposure to AI.
2. Conservative Investors: Consider partial entries at dips, as the stock has historically rebounded from pullbacks (e.g., the April 2025 low at $94).
3. Short-Term Traders: The rally may face near-term resistance due to valuation concerns and competitive pressures, but the fundamentals remain bullish.

Nvidia is not a “buy and hold forever” stock at current levels, but it's still a cornerstone of the AI era. For those who missed the 82% rally, the key is to assess whether the company can sustain its growth and defend its moat against AMD, Intel, and in-house solutions from cloud giants. If AI adoption accelerates as expected, even a $200 price tag may seem cheap in five years.