TLDR
- Nvidia (NVDA) stock is down 10-21% in recent periods amid broader AI sector concerns
- Analysts remain generally bullish with an average price target of $177.19 (65% upside)
- Recent CoreWeave (CRWV) IPO underperformance is seen as a “big test” for Nvidia and AI sector
- Geopolitical issues including Trump’s “reciprocal tariffs” and China blocking Nvidia’s H20 chip are creating headwinds
- Despite challenges, Nvidia posted strong Q4 earnings with 77.9% YoY revenue growth to $39.3 billion
Nvidia, the semiconductor powerhouse that has been riding the artificial intelligence wave, is facing several challenges that have pushed its stock down in recent months. The chip maker’s shares have dropped approximately 21% in 2025 so far, with a 10% decline in the past month alone.
Despite these setbacks, many analysts remain bullish on the company’s prospects. Wedbush analyst Matt Bryson told CNBC that he’s “definitely confident” that Nvidia will meet its guidance.
Bryson noted that Nvidia’s new chips are “getting where they need to be” and rolling out as planned. He also mentioned that demand for the tech giant’s chips is increasing slightly.
However, the analyst did point to several challenges facing the company. Microsoft may be buying fewer AI chips for OpenAI than previously expected, which could impact Nvidia’s sales.
The weak performance of cloud computing firm CoreWeave’s stock following its recent IPO suggests that investor sentiment towards the chip sector has deteriorated. CoreWeave, a major client and investor for Nvidia, priced its IPO below the expected range.
CoreWeave settled for raising $1.5 billion instead of the initially targeted $2.7 billion. By late 2024, Nvidia had provided CoreWeave with more than 250,000 GPUs and owned a 6% stake in the company.
An investor known as Bluesea Research has described CoreWeave’s IPO as a “big test for Nvidia and the entire AI industry.” The investor cautioned that a substantial correction from CoreWeave’s $40 IPO price target could negatively affect sentiment toward Nvidia’s stock.
Geopolitics
Geopolitical issues are also creating headwinds for Nvidia. President Donald Trump is preparing to roll out “reciprocal tariffs” on April 2, taxing imports from countries that impose higher tariffs on U.S. goods. This move has rattled markets, raising fears of inflation and supply chain disruptions.
Additionally, Washington’s crackdown on Chinese tech firms is forcing U.S. chipmakers to navigate stricter approvals for semiconductor sales. Beijing has responded by blocking Nvidia’s H20 chip over energy-efficiency concerns, further limiting the company’s sales in China.
Despite these challenges, Nvidia’s financial performance remains strong. In its fiscal 2025 Q4 earnings released on February 26, Nvidia reported revenue soaring 77.9% year-over-year to a record high of $39.3 billion, exceeding expectations.
Profit followed the same upward trajectory, with adjusted earnings per share up 71.2% to $0.89, beating the predicted $0.85. Data center sales hit $35.6 billion, almost doubling from the year prior.
For the first quarter of fiscal 2026, Nvidia’s management is targeting $43 billion in revenue, which represents a potential 65% increase from the previous year. Non-GAAP gross margins are expected to remain strong at 71%.
Nvidia’s balance sheet also remains solid. The company’s cash holdings increased by 66.3% in fiscal 2025 to over $43.2 billion, keeping it in a net cash position despite heavy AI investments.
Wall Street analysts anticipate Q1 earnings per share to surge 50% year over year to $0.87. For fiscal 2026, earnings per share are expected to climb 42% to $4.16, followed by another 23.8% annual increase to $5.15 in fiscal 2027.
Positive Outlook
Overall, analysts maintain a positive outlook on Nvidia’s stock. Of the 44 analysts covering the stock, 38 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and four recommend a “Hold.”
The average price target stands at $177.19, representing a potential upside of 65% from current levels. The most optimistic target of $220 suggests the stock could more than double from its current price.
Analyst Kevin Green from Charles Schwab explains that despite a plateau over recent months and a short-term pullback, Nvidia’s longer-term three-year uptrend remains intact. He attributes some of the recent weakness to a “degrossing” trend, where investors reduce exposure to high-valuation stocks after strong gains.
Nvidia currently trades at a forward price-earnings ratio of 26.4x and a price-sales ratio of 13.09, which are actually lower than its historical averages. These valuation metrics, combined with Nvidia’s dominant position in high-growth AI sectors, suggest the stock may still have considerable upside potential.
The company’s strategic collaborations with cloud giants like Amazon and Microsoft, as well as automotive partnerships with Toyota and Hyundai, demonstrate Nvidia’s expanding influence across multiple industries.
