NVDA Stock Analysis: Is Nvidia Still a Buy After the AI Boom?

Nvidia (NVDA) has taken the tech world by storm, especially with the explosive growth in demand for artificial intelligence (AI) technologies. Over the past 18 months, the company’s stock price has surged nearly 200%, making it a hot topic for investors.

But with such significant growth, you may be wondering: Is Nvidia still a good investment after the AI boom? Let’s dive into the key factors affecting Nvidia’s stock performance, financial health, and future prospects.

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Nvidia's Explosive Growth: AI-Driven Success

Nvidia has become a dominant player in the AI sector, largely due to its powerful GPUs. These chips are the backbone of many AI models, particularly for data center workloads and AI training. 

Nvidia’s strong position in the data center market, coupled with its software ecosystem (like CUDA), has helped the company maintain its leadership in AI hardware. 

The surge in demand for AI products has been a significant driver of Nvidia's growth, especially as the world increasingly relies on AI for a variety of applications, from cloud computing to autonomous vehicles.

Stock Performance & Valuation

Nvidia's stock has appreciated from $48.17 at the beginning of 2024 to $144.17 by June 2025—a remarkable increase of 199.3%. However, with this growth comes higher volatility. 

Nvidia’s stock has an annualized volatility of 56.3%, reflecting its high beta exposure to swings in AI-driven market sentiment. As a result, the stock’s current valuation is elevated, with a P/E trailing ratio of 46.5x and a forward P/E of 29.7x, suggesting that Nvidia might be priced for continued high growth.

Business Fundamentals: Revenue & Profit Growth

Impressive Financial Performance

Nvidia’s financials have been nothing short of extraordinary. In fiscal year 2024, the company achieved $60.9 billion in revenue, marking a 126% year-over-year growth. More impressively, its net income surged 114% YoY to $29.8 billion.

A major driver of this growth has been Nvidia’s data center segment, which saw a 217% increase in revenue, reaching $47.5 billion. This now constitutes about 78% of Nvidia’s total revenue.

Profitability and Balance Sheet

Nvidia’s profitability metrics are also impressive. With a gross margin of 75% and an operating margin of 54% in Q4 FY 2025, Nvidia has been able to generate substantial cash flow. 

The company’s operating cash flow reached $64.1 billion in FY 2025, supporting future investments in R&D and potential stock buybacks. 

Additionally, Nvidia’s debt-to-equity ratio of 0.12 indicates a strong balance sheet, with $43.2 billion in cash and equivalents as of January 2025. This financial strength enables Nvidia to continue expanding its AI ecosystem and compete with rivals in the GPU and AI sectors.

AI Leadership & Market Share

Dominance in GPUs and AI Ecosystem

Nvidia continues to hold an impressive 92% market share in discrete GPUs, leaving competitors like AMD and Intel in the dust.

The company’s CUDA software ecosystem is also entrenched across hyperscalers, ensuring a robust pipeline of revenue from AI training and inference workloads. 

With the ramp-up of its Blackwell AI platform, Nvidia is poised to continue its leadership position in the AI hardware market, which bodes well for long-term growth.

Competitive Moat

Nvidia’s competitive advantage lies not only in its market share but also in its software stack and performance leadership. 

This creates high switching costs for customers, particularly large cloud providers and AI developers, making it difficult for competitors to match Nvidia’s level of performance and integration. 

Additionally, the company’s ability to innovate with new products, such as the Blackwell Ultra chips, will further bolster its stronghold in AI and data center markets.

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Valuation and Analyst Sentiment

Current Valuation & Analyst Price Targets

Nvidia’s stock is currently trading at a premium, with analysts’ 12-month price target averaging around $172.22, representing about 19% upside potential. However, with a forward P/E of ~29.7x and a PEG ratio of 1.03, investors should consider the high expectations priced into the stock. 

While Nvidia has proven its growth potential, its elevated valuation means there is less room for error. If market conditions change or if Nvidia faces increased competition in AI, the stock may not be able to maintain its current high growth trajectory.

Analyst Ratings and Market Sentiment

Nvidia’s stock has garnered a strong buy consensus from 66 analysts. Recent bullish upgrades have been supported by Nvidia’s strong revenue growth, AI market leadership, and high-margin business model.

However, some analysts have expressed caution due to increasing competition in AI inference chips, which could pressure Nvidia’s margins in the coming years.

Risks and Considerations

While Nvidia’s prospects look promising, there are a few risks to consider:

1. Valuation Risk: With such high expectations baked into Nvidia’s stock, any underperformance relative to these expectations could lead to a sharp decline in stock price.
2. Supply Constraints: Nvidia has experienced supply bottlenecks in its gaming GPUs, which could impact revenue from that segment.
3. Competition in AI Inference: Rivals like AMD and AWS Trainium 2 are developing inference-optimized chips, which could challenge Nvidia’s dominance in non-training AI workloads.

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Conclusion: Is Nvidia Still a Buy?

Nvidia remains a compelling growth stock, driven by its leadership in the AI and data center markets. With strong financials, a dominant position in GPUs, and a robust AI ecosystem, Nvidia has the potential to continue delivering strong returns for investors.

However, its elevated valuation and increasing competition in the AI space pose risks that investors should keep in mind. 

For those with a long-term investment horizon, Nvidia is still a buy at current levels, but it’s essential to monitor the evolving AI landscape and market conditions closely.

FAQ

Is Nvidia stock still a good buy after the AI boom?

Yes, Nvidia remains a strong buy for long-term investors due to its dominant position in AI hardware and its continued growth in the data center market. However, its elevated valuation may limit short-term upside.

How is Nvidia’s financial performance?

Nvidia has shown impressive financial growth, with a 126% increase in revenue and a 114% rise in net income in FY 2024. The company’s strong profitability metrics and balance sheet position it well for future growth.

What are the risks of investing in Nvidia?

The primary risks include Nvidia’s high valuation, potential supply constraints in gaming GPUs, and increasing competition in AI inference chips, which could impact margins.