Is Nvidia Stock Ripe to Buy or Is There More Investor Pain Ahead?

Strong Earnings Amid the AI Boom

Nvidia, a key player in the AI revolution, delivered another stellar earnings report as demand for high-performance AI chips remained strong. In Q4, the company exceeded expectations, reporting $39.33 billion in revenue and $0.89 adjusted earnings per share (EPS)—a sharp rise from the $22.1 billion in revenue and $0.52 EPS in the same quarter last year. This represents a 71% increase in EPS and an 82.4% jump in sales year-over-year, highlighting Nvidia’s continued dominance in the AI chip market.

Nvidia Chart Weekly – Sellers Unable to Close Below the 50 SMA

Following the report, NVDA shares initially surged 5% to $135.18 in after-hours trading. However, this momentum quickly faded, and by Thursday, the stock had dropped sharply to $116.23, marking a 15% decline in just two days. Despite this pullback, Nvidia found support around $120, near its 100-day moving average, preventing further losses. This stabilization helped the Nasdaq Composite close the session up 1.5%, reinforcing investor confidence in the tech sector despite short-term volatility.

Long-Term Growth Still Intact?

Even with the recent decline, Nvidia has experienced an extraordinary bullish run since October 2022, when it traded at $10.80. By January 2025, the stock had gained 1,400%, and even after the recent dip, it remains up by 1,200% from those lows. This suggests that while short-term corrections are inevitable, the long-term trend remains strongly bullish, potentially making this pullback a buying opportunity.

AI Demand and Market Challenges

The demand for Nvidia’s GPUs remains exceptionally high, as they form the backbone of AI infrastructure. Despite concerns that China’s DeepSeek could challenge Nvidia’s growth, CEO Jensen Huang remains optimistic about continued strong demand. Additionally, the Project Stargate initiative—a planned $500 billion AI infrastructure investment by U.S. companies over the next few years—positions Nvidia to benefit significantly.

However, challenges remain. Unlike software firms, Nvidia lacks a recurring revenue model, and the semiconductor industry is inherently cyclical. Moreover, major Nvidia customers like Broadcom are developing their own AI chips, increasing competition. Additionally, the company faces the risk of stricter U.S. export regulations, which could limit the chips it can sell to Chinese market  which is a massive market.

Looking Ahead: A Buying Opportunity?

Nvidia has forecasted $43 billion in revenue for Q1 2025, compared to $42.07 billion in the Q1 of 2024, when it reported $26.04 billion in sales. While the stock has faced recent pressure, its dominant position in AI and continued revenue growth suggest long-term strength. Investors now face the question: Is this just a temporary dip, or a sign of deeper challenges ahead? With AI demand booming and Nvidia leading the charge, this correction could be an attractive entry point for long-term investors, especially after the failure to break below the 50 weekly SM twice, which shows demand from buyers.