Don’t Worry. Nvidia Stock’s Plateau Is Just a Rest Before the Next Big Climb.

  • There is continued concern that Nvidia (NVDA) has finally peaked in price.
  • The AI chip leader’s growth is slowing down, but the stock’s momentum is not completely halted.
  • Now is a good time to consider investing in Nvidia stock.
Nvidia stock - Don’t Worry. Nvidia Stock’s Plateau Is Just a Rest Before the Next Big Climb.

Source: Piotr Swat / Shutterstock.com

Look at a Nvidia (NASDAQ:NVDA) stock chart, and you may notice a trading pattern that doesn’t look swell for the future. We’re talking, of course, about the fact that Nvidia stock has held steady at around $125 per share over the past month.

This may create the impression that, after an extended hot run, Nvidia is headed toward a period of far less impressive price appreciation. However, charts can be deceiving.

Based on the AI chip leader’s fundamentals, there remains a path for shares to hit even loftier price levels, both within this year, and in the years ahead. With this in mind, don’t jump to conclusions, and bail or avoid Nvidia. Your best course of action may be to make the opposite move.

Nvidia Stock and the Summer Doldrums

Given how far and how fast this stock has gone higher over the past eighteen months, it’s understandable if you are reading too much into recent NVDA price action.

However, rather than being a sign of the top before the fall, there may be a simple, yet not-so-gloomy explanation behind the stock’s sideways price action as of late.

While the broad market is bucking the trend, by inching higher, Nvidia stock may have entered what is known as the Wall Street summer doldrums.

This is the phenomenon where the Memorial Day through Labor Day vacation season leads to decreased stock market activity.

Besides seasonality, other factors help to explain why shares are treading water right now. One key reason is the fact that the market has already digested Nvidia’s latest earnings release.

The next quarterly earnings release won’t hit the street until sometime around Aug. 21. To further assuage concerns, here’s something else upbeat to consider.

Don’t assume that this rangebound period is merely the calm before another round of market storms.

Rather, it may be the prelude to another breakout. Beyond just Nvidia’s next earnings release, are some other developments that may help drive the next major move.

Growth, Growth and More Growth, Albeit at a Slower Pace

Since 2023, Nvidia has racked up some impressive levels of year-over-year revenue and earnings growth. Interestingly enough, this hasn’t arguably not been fully baked into the valuation of Nvidia stock.

For example, as seen in Nvidia’s most recently-released quarterly results, earnings for the quarter ending April 28, 2024 adjusted earnings were up a staggering 461%.

However, shares went up by just 193%, from a split-adjusted $29 to $85 per share. Yes, investors bid up NVDA ahead of its initial AI chip growth bonanza, and the market has considered the potential for a growth slowdown.

Still, with Nvidia getting “cheaper” on a valuation basis over time, this paves the way for a continuation of growth, albeit at a slower pace, to still result in outsized gains for shares.

If results and guidance meet or beat expectations when Nvidia next unveils quarterly results next month, this could drive the next big surge for shares.

In the quarters ahead, if results, guidance, as well as updates on the company’s upcoming Rubin next-generation AI chip platform impress the market, expect another big jump in confidence regarding Nvidia’s growth prospect during this fiscal year and the next.

The Verdict on Nvidia Stock

Sell-side earnings forecasts for NVDA continue to be all over the place, but following the August Q2 FY 2025 earnings release, Wall Street consensus could be in for a major upward revision.

Say, toward the higher end of forecasts. These call for annual earnings per share this fiscal year of $4, even nearly $5.

By 2025, it could become more clear that EPS is on track to hit $6, $7 or even more per share within two fiscal years.

All of this points to NVDA climbing back above its $140 per share high water mark. Perhaps, even up to prices topping $200 per share.

With this in mind, there’s no need to be scared off by the recent price performance of Nvidia stock. You may want to snap up this AI winner before the summer slump ceases.

Nvidia stock earns an A rating in Portfolio Grader.

On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.


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