After experiencing a downturn, Nvidia’s stock is seeing a resurgence thanks to some recent positive developments.
As trading began today, Nvidia’s stock (NVDA) was officially in correction territory, having fallen over 12% from its recent peak. However, it showed signs of recovery, climbing as much as 4.8% during the day. By 11:46 a.m. ET, the stock was still up by 3.4%.
The upward movement of this renowned chipmaker and AI specialist can be attributed to several encouraging news reports.
Positive Developments
Cloud service providers continue to be Nvidia’s largest clients, contributing to about 50% of its data center revenue for the third quarter of fiscal 2025, as noted by the company’s chief financial officer, Colette Kress.
Investors gained further insights into Microsoft’s purchases this year, thanks to a report by the Financial Times. The report indicated that Microsoft “bought twice as many” of Nvidia’s Hopper chips as any of its competitors in 2024.
According to data from technology consultants Omdia, Microsoft purchased 485,000 chips, significantly more than Meta Platforms, the next largest buyer, which bought 224,000 chips. This suggests that other companies might need to increase their purchases to keep up.
Additionally, Nvidia unveiled its most affordable generative AI supercomputer, the Jetson Orin Nano Super. This compact device, which can fit in the palm of a hand, provides AI capabilities for “hobbyists and students” at just $249, half the price of the previous generation, thus making it accessible to a broader audience.
Is Nvidia Stock a Buy?
There is increasing evidence that AI adoption is growing rapidly. However, some investors are concerned that Nvidia’s valuation might be too high, especially considering it is trading at 53 times earnings. Historically, the stock has traded at about 59 times earnings over the past decade, which could mean it’s currently undervalued.
For fiscal 2026, which begins in late January, Nvidia is valued at roughly 29 times next year’s estimated sales. Given the company’s growth potential, this might present a good buying opportunity.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
