Is It Still Too Late to Buy Nvidia Stock in the AI Gold Rush?

The AI sector's meteoric rise has turned Nvidia into a household name, with its stock surging to record highs in 2025. For investors, the question looms: Is it still too late to enter this high-growth, high-demand sector? The answer hinges on balancing Nvidia's unparalleled dominance in AI infrastructure with the growing concerns about overvaluation and market sustainability.

Recent Financial Performance and Market Dynamics

Nvidia's third-quarter fiscal 2026 results underscore its commanding position in the AI gold rush. Revenue hit $57 billion, a 62% year-over-year increase, driven by surging demand for its AI chips from cloud providers and hyperscalers like Microsoft and Oracle. The company raised its next-quarter revenue guidance to $65 billion, far exceeding market expectations. This performance has been fueled by strategic moves, such as the U.S. lifting export restrictions on H20 AI chips to China, which bolstered investor confidence.

However, the stock's volatility post-earnings-falling 3% despite beating expectations-reflects growing unease. Analysts warn of an AI bubble, citing speculative spending and circular deals, such as the $100 billion partnership between Nvidia and Openai. Meanwhile, tech giants like Amazon, Google, and Meta plan to invest $400 billion in AI data centers in 2025, much of it financed through debt, raising red flags about overbuilding and financial instability.

Valuation Metrics and Market Skepticism

Nvidia's valuation remains a contentious topic. While its price-to-earnings (P/E) ratio of 56.93x aligns with the calculated fair ratio of 60.47x according to financial reports, a discounted cash flow (DCF) analysis suggests the stock is overvalued by 43.7% according to the same report. Morningstar has raised its fair value estimate to $240, citing the company's "strong economic moat" in AI, but acknowledges the sector's high uncertainty.

The tension between growth potential and valuation risks is further highlighted by Nvidia's $500 billion order backlog through 2026 and gross margins projected to stay above 75% according to market analysis. Yet, critics argue that such metrics may not justify the current price if AI infrastructure spending fails to translate into sustainable revenue.

Strategic Entry Points and Risk Management

For investors considering entry, timing and risk mitigation are critical. Nvidia's stock has already priced in much of its near-term growth, but its long-term prospects remain tied to its ability to maintain technological leadership. Strategic entry points may arise during short-term corrections, such as the 3% post-earnings dip in November 2025 according to market analysis, which some analysts view as a buying opportunity amid broader market anxiety according to Schwab insights.

However, investors must also prepare for downside risks. The AI sector's reliance on speculative capital and the potential for regulatory shifts-such as renewed export controls-could disrupt momentum. Diversifying exposure across the AI ecosystem, rather than relying solely on Nvidia, may help balance the high-reward, high-risk profile of this sector.

Conclusion: Balancing Opportunity and Caution

Nvidia's position as the AI sector's bellwether is undisputed, but its stock's current valuation demands a nuanced approach. While the company's financial strength and backlog suggest resilience, the specter of an AI bubble cannot be ignored. For disciplined investors, strategic entry points may still exist, provided they are coupled with rigorous risk management. As Jensen Huang and management confidently project into 2026, the key will be distinguishing between sustainable innovation and speculative frenzy-a challenge that defines every gold rush.