In This Article:
Nvidia (NASDAQ: NVDA) shares fell on Monday as the artificial intelligence (AI) chip leader continues to show sensitivity to the broader market pullback.
Semiconductor stocks like Nvidia are known for being cyclical, so it's understandable that the stock would fall on the general stock market concerns, which include weakening consumer sentiment, stubborn inflation, intensifying tariffs, and other issues. The news today that seemed to drive the market down was President Trump's reaffirming of "Liberation Day" or a new round of reciprocal tariffs that are set to go into effect on Wednesday.
As a result, Nvidia stock was down 2.1% as of 2:58 p.m. ET, after falling as much as 5.5% earlier in the session.
Nvidia's momentum is shifting
Through 2023 and 2024, Nvidia could do little wrong. The company posted blowout growth as demand skyrocketed for its data center GPUs, driven by the advent of ChatGPT.
However, despite continued strong results, including a revenue increase of 78% in its most recent quarter, Nvidia is now in its most sustained drawdown since the AI era started. Despite an increasingly attractive multiple, the price action in Nvidia seems to indicate that investors are preparing for more of the pain in the macro-level economy and hedging their bets on a recession.
Is Nvidia a buy?
Nvidia shares could certainly fall further from here, but based on the company's growth momentum, leadership in AI, and competitive advantages, the business continues to look attractive, and the valuation is very reasonable at a trailing price-to-earnings ratio of 36.5 and a forward P/E of less than 25.
For long-term investors, buying Nvidia at the current price point, but patience is required as the stock is likely to be volatile as long as economic uncertainty reigns over the market.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $672,177!*
Now, it’s worth noting Stock Advisor’s total average return is 815% — a market-crushing outperformance compared to 162% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.