Nvidia Eyes New Highs Amid Trump's Stargate Optimism; Is Nvidia A Buy Now?

Nvidia (NASDAQ: NVDA) has been on a tear lately, with its stock price surging to new highs. The company's recent earnings report and guidance have fueled optimism among investors, with many wondering if Nvidia is a buy now. Let's dive into the factors driving Nvidia's stock price and explore whether it's a good time to invest.



Strong Earnings and Guidance

Nvidia reported fiscal Q4 2024 earnings on February 21, 2024, beating expectations with total revenues of $22.1 billion. The company's data center segment, which includes AI processors and related parts, saw a significant revenue surge to $18.4 billion, driven by strong demand from cloud service providers and enterprises. Nvidia's non-GAAP gross margin increased to 79% in Q4, up from 76% in Q2, and its non-GAAP diluted EPS came in at $5.16/share, beating analyst estimates.

For fiscal Q1 2025, Nvidia guided nearly 10% ahead of expectations to $23.5-24.5 billion in total revenue, with analysts now projecting the Data Center segment to make up $20.9 billion. The company's strong earnings and guidance have contributed to a significant increase in its stock price, with Nvidia shares up nearly 17% since the Q3 release and 62% since the Q2 release.

AI Boom and Market Dominance

The AI boom has been a significant driver of Nvidia's continued growth and market dominance. The company's GPUs have become the backbone of AI and machine learning infrastructure, with many major players in the AI space relying on Nvidia's chips. As AI adoption deepens and demand for AI chips remains high, Nvidia's stock is expected to continue its bullish trend in the coming years. Analysts project a potential price range of $106 to $140 for 2025, with the company's fundamentals remaining strong, driven by growth in its data center and AI segments.



Valuation and Expert Opinions

Nvidia's current P/E ratio is around 52.65, which is significantly higher than its historical average of around 30. While the company's strong growth prospects and dominant position in the AI and GPU markets may justify its high valuation, it is still possible that the stock is overvalued if growth slows or if the market becomes more risk-averse. However, it is important to note that Nvidia's valuation is still within the range of other high-growth tech companies, and its long-term prospects remain strong.



Expert opinions on Nvidia's stock are divided. Some analysts view it as a runaway success that will continue as AI adoption accelerates, while others caution that Nvidia's sky-high P/E ratio leaves little room for error. The consensus leans bullish, with price targets topping at $200 for the next 12 months. However, the range of estimates for Nvidia's Data Center segment in FY 2026 remains substantial, implying significant debate about the company's growth outlook.

Conclusion

Nvidia's recent earnings report and guidance, coupled with the AI boom and market dominance, have contributed to a significant increase in the company's stock price. While the stock may be overvalued based on its P/E ratio, its strong fundamentals and long-term prospects remain intact. Investors should consider Nvidia's valuation, growth prospects, and market position when deciding whether to buy the stock now. As always, it's essential to do thorough research and consider your risk tolerance before making any investment decisions.