Nvidia (NASDAQ:NVDA) stock’s started to plateau after delivering some huge returns in recent years. Over six months, the stock’s up around 20%. This means £10,000 invested then would be worth £12,000 today, plus a little extra given the depreciation of the pound.
However, the trajectory certainly hasn’t been smooth. Six months ago, in early August, artificial intelligence (AI) stocks experienced one of their first confidence crises amid some broader economic concerns. Nvidia, among others, pulled back from their highs.
So what’s being going on?
Nvidia’s navigated a dynamic six months marked by strategic advancements and market turbulence. The company accelerated production of its Blackwell GPU architecture, designed to dominate artificial intelligence (AI) workloads, with CEO Jensen Huang announcing plans to deploy these chips “in every data center in the world“.
However, supply chain challenges emerged as analysts predicted Blackwell’s volume ramp might be delayed to mid-2025 due to power consumption and interconnect optimisation requirements.
The stock faced a seismic 17% single-day plunge in late January after Chinese AI startup DeepSeek unveiled its cost-efficient R1 mode, though Nvidia later partnered to offer DeepSeek-R1 through its inference microservices platform.
Political concerns arose as President Trump proposed semiconductor tariffs following Huang’s White House meeting, while US economic growth hit 3% in Q2 2024, bolstering broader market confidence.
Despite these challenges, Nvidia shares demonstrated resilience, recovering from August 2024 lows and a $600bn valuation drop during the DeepSeek crisis to post a net 20% six-month gain.
Analysts attribute this rebound to strong Blackwell demand projections and Morgan Stanley‘s reaffirmed $152 price target citing the sell-off as a buying opportunity. The company maintains leadership in AI hardware while adapting to evolving geopolitical and competitive landscapes.
Is this a real opportunity?
Many analysts think Nvidia’s recent DeepSeek-induced dip presents a compelling buying opportunity. Currently, analysts are projecting an average 12-month price target of $172.28, ranging from $120 to $220. This target suggests significant potential for price appreciation from the current price of $128.68.
And while Nvidia’s forward price-to-earnings ratio of 43.6 times is 69.6% higher than the sector median, it’s 8.9% lower than its own five-year average, indicating relative value compared to historical levels. More notably, Nvidia’s forward price-to-earnings-to-growth (PEG) ratio of 1.14 is 38.4% below the sector median and 39.6% below its five-year average, suggesting attractive growth prospects relative to its valuation.
Given Nvidia’s dominance in AI and upcoming Blackwell GPU launch, the current price may offer an entry point for investors to consider seeking exposure to the booming AI market.
Risks remain
The market appears to have brushed off some of the concerns about the DeepSeek model, which promised to deliver AI at a fraction of the price and using old Nvidia chips. I still have some concerns that there will be another DeepSeek revelation, but time will tell.
Up 200%, my Nvidia shares are already well-represented in my portfolio. For now, I’m not buying more.
This post was originally published on Motley Fool
