Nvidia Stock Plunged 19% in Q1: Time to Buy?

Core Viewpoint - Nvidia has experienced significant growth in revenue and demand for its chips, particularly in the data center market, despite facing challenges such as stock price fluctuations and competition [1][2]. Group 1: Financial Performance - Nvidia's annual revenue has increased from $4.7 billion to$130 billion over the last decade [1]. - Analysts project a 57% increase in full-year revenue, with data center revenue rising 93% year over year in the fiscal fourth quarter [2]. - The company guided for fiscal Q1 revenue to be up approximately 65% year over year [11]. Group 2: Market Position and Demand - Nvidia is the leading supplier of GPUs for data centers, with major cloud service providers as key customers [2]. - The new Blackwell computing system generated $11 billion in revenue during the last quarter [2]. - Demand for AI inferencing is accelerating, driven by the popularity of models like OpenAI's ChatGPT [6]. Group 3: Valuation and Investment Considerations - Nvidia's stock trades at around 24 times this year's consensus earnings estimate, significantly below its five-year average trailing P/E multiple of 80, indicating potential undervaluation [4]. - The company is experiencing high profit margins of 56%, but this may lead customers to seek cheaper alternatives [5]. - If Nvidia meets long-term earnings growth estimates of 35% annually, the stock could significantly increase in value over the next several years [12]. Group 4: Competitive Landscape and Risks - Increasing competition poses a risk, with companies like OpenAI exploring the development of their own AI chips [5][10]. - Nvidia faces challenges in the Chinese market, where sales of data center chips remain below pre-restriction levels [9]. - Despite these risks, major customers like Google and Amazon continue to rely on Nvidia's GPUs for advanced AI applications [10].