Why NVIDIA’s AI Monopoly Makes Its 25 P/E a Bargain in a $1.7T Market

NVIDIA’s stock (NVDA) has been a lightning rod for debate in 2025. Bears cite margin pressures, macroeconomic uncertainty, and intensifying competition as reasons to avoid the AI chipmaker. Bulls, however, see a company positioned to dominate a $1.7 trillion data center market by 2035, with a forward P/E of just 25.2—a valuation anomaly given its 59% 2025 revenue growth and structural AI tailwinds. Here’s why this is a generational buy.

The CUDA Ecosystem: A Moat That’s Unbreakable

NVIDIA’s CUDA platform—a decades-old software/hardware ecosystem—is its crown jewel. Developers write code in CUDA, which is optimized for NVIDIA GPUs. This lock-in creates a virtuous cycle: more developers using CUDA drive demand for NVIDIA chips, while new hardware (like the Blackwell superchip) enhances CUDA’s capabilities. Competitors like Intel and AMD lack this ecosystem, making it nearly impossible to dislodge NVIDIA from its pole position. As AI adoption scales, so does NVIDIA’s monopoly over the $1.7T data center market, where its GPUs power 80% of cloud AI infrastructure.

Valuation: A 25 P/E for a 59% Grower? The Numbers Don’t Lie

NVIDIA’s forward P/E of 25.2 (vs. 59% revenue growth) is a steal in a market pricing most tech stocks at 2x-3x their growth rates. shows that even during periods of margin compression, the stock’s valuation has never been this low relative to its growth. In 2025 alone, NVIDIA’s data center revenue hit $115.2 billion—a 142% surge—driven by Blackwell GPUs and AI software. This isn’t a fad; it’s the infrastructure of the next decade.

Margin Concerns? Blackwell and Software Will Save the Day

Bear arguments center on gross margin erosion, which dipped to 73% in Q4 FY2025 from 75% in 2024. But two catalysts will reverse this:
1. Blackwell GPU Ramp: The $11 billion in Q4 Blackwell sales (up from $0 in 2023) are still scaling. As production ramps, unit costs fall, and margins expand.
2. Software Monetization: NVIDIA’s AI software stack—Blackwell’s tools, Omniverse, and DRIVE—generate recurring revenue with ~90% gross margins. The company’s software revenue hit $11.4 billion in FY2025, a 9% rise, and is set to explode as enterprises pay for AI training platforms and autonomous driving stacks.

Meanwhile, autonomous driving synergies—like the $2.5 billion DRIVE software sales—link automotive and data center businesses, creating a flywheel effect. These software streams are underappreciated in current valuations.

Overcoming the Near-Term Risks

Analysts’ sell ratings and China trade tensions are overblown. The $43 billion Q1 FY2026 revenue guidance (+65% YoY) exceeds estimates, and even with macro headwinds, AI adoption is too entrenched to slow. Enterprises are already locked into NVIDIA’s ecosystem—replacing chips would require rewriting code, a costly move.

Final Call: This Is a Decadal Bet, Not a Quarterly Trade

NVIDIA’s stock is priced for a slowdown that won’t materialize. The $1.7T data center TAM, CUDA’s unassailable moat, and software-driven margin expansion make this a once-in-a-generation opportunity. Even if near-term margins dip, the long-term tailwinds—agentic AI, physical AI, and generative tools—will fuel decades of growth.

The math is simple: at 25x a P/E, NVIDIA is priced for failure. But with AI infrastructure being the defining tech trend of the 2020s, this is a buy now, hold forever stock. The bears are right about one thing: NVIDIA won’t be cheap for long.

Action: Buy NVIDIA on any dip below $250. This is a 10-year bet on the AI revolution—and it’s priced like a 2025 discount.