Cautious Investors Should Wait for THIS Entry Point Before Buying ...

With the onset of the artificial intelligence (AI) era, semiconductor giant Nvidia (NVDA) has reported exceptional revenue and earnings growth. Increased demand for AI computing, combined with the company’s advanced GPU offerings, has significantly enhanced its financial performance. CEO Jensen Huang’s long-term vision and willingness to take calculated risks propelled Nvidia into an AI powerhouse. Between 2015 and 2024, revenue grew from $4.7 billion to a staggering $60.9 billion. If consensus estimates prove right, the company could report $129.3 billion in revenue for fiscal 2025. 

Similarly, Nvidia stock has outperformed the S&P 500 Index ($SPX) over the last decade, with exceptional gains of around 24,275.3%.

With a market capitalization of $3.3 trillion, Nvidia has now joined the exclusive trillion-dollar club. Industry experts predict that the company will be worth $10 trillion in the next decade or so. Though the stock is up just 1% so far this year, exceptional growth in the coming quarters could propel it higher. Nvidia will report its fourth quarter and full fiscal 2025 results on Feb. 26. Let’s find out if the stock is a buy now. 

Nvidia’s Journey Has Been Outstanding, Thanks to Bold Leadership and Continued Innovation

Nvidia’s journey has been incredible. The company evolved into a dominant force in AI, gaming, and data centers. The rise of AI and machine learning has fueled demand for its H100 and A100 GPUs. Nvidia, led by co-founder and CEO Jensen Huang, took some bold risks that paid off. It pushed into AI and deep learning when others were skeptical. The company introduced the CUDA platform in 2006, allowing GPUs to be used for general-purpose computing. This was a crucial step toward AI as over 5.5 million developers globally use the CUDA platform now, giving the company a competitive advantage over peers.

Fiscal 2025 has been outstanding for the company so far. In the third quarter of fiscal 2025, total revenue surged 94% year-over-year to reach $35.1 billion, while adjusted earnings increased 103% year-over-year to $0.81 per share. Nvidia’s bold decision to invest in AI data centers has paid off. It is now the largest revenue driver, fueled by AI growth. Data Center revenue reached $30.8 billion, an increase of 112%, comprising roughly 88%of total revenue. 

Furthermore, many telecommunications providers, such as T-Mobile (TMUS) and Ericsson (ERIC), have adopted Nvidia’s AI Aerial platform to accelerate the commercialization of AI-RAN.  With increasing AI model training and cloud adoption, this segment is expected to drive long-term growth. Additionally, in the third quarter, Gaming segment revenue rose 15%, with Professional Visualization segment revenue growing by 17% year-over-year. Nvidia’s DRIVE platform powers autonomous vehicles for Tesla (TSLA), Mercedes, and other automakers. Its Automotive and Robotics segment revenue jumped 72% in Q3 to $449 million. As self-driving technology matures, the automotive sector could contribute significantly to revenue.

Despite heavy investments in AI, Nvidia has a robust balance sheet with cash, cash equivalents, and marketable securities totaling $38.5 billion at the end of Q3. It generated free cash flow of $16.7 billion, paying out $245 million in dividends and $11 billion worth of share repurchases. 

For the fourth quarter, Nvidia expects total revenue to be around $37.5 billion, plus or minus 2%, driven by strong demand for Hopper products and the initial ramp-up of Blackwell chips. Meanwhile, analysts forecast revenue growth of 72.4% to $38.1 billion, with earnings per share landing at $0.85 in the fourth quarter. For the full-year fiscal 2025, analysts forecast revenue growth of 112.2% to $129.3 billion, followed by a 127.9% jump in earnings. For fiscal 2026, revenue and earnings are expected to increase by 51.5% and 50%, respectively. 

What Does Wall Street Say About Nvidia Stock Now?

Recently, Robert W. Baird analyst Tristan Gerra reiterated a “Buy” rating for NVDA stock. Gerra believes that despite competition and cyclical risks in the semiconductor industry, “Nvidia’s strong positioning and performance gains” support his rating and $195 price target. Separately, Oppenheimer analyst Rick Schafer maintained a price target of $175.

On Wall Street, Nvidia stock remains a “Strong Buy.” Out of the 43 analysts covering the stock, 37 have a “Strong Buy” recommendation, two say it’s a “Moderate Buy,” and four rate it a “Hold.” The average target price of $176.95 suggests Nvidia stock can climb by roughly 30% from current levels. 

Plus, the high price estimate of $220 implies upside potential of 63.6% over the next 12 months.

The Key Takeaway

Huang has been the key architect of the company’s success, showcasing how visionary leadership and thirst for innovation can transform a behind-the-scenes chip company into a tech powerhouse in a few years. With a stronghold in AI, gaming, and high-performance computing, alongside investments in emerging technologies such as the metaverse and quantum computing, Nvidia’s future looks promising.

A strong quarterly report on Wednesday, Feb. 26 could propel the stock higher. While I agree with Wall Street’s optimistic stance on Nvidia’s long-term potential, the stock remains overvalued at 30 times projected 2026 earnings. Thus, cautious investors might prefer a better entry point at around $128 to invest with a margin of safety.