Is This AI Stock Still Worth Buying After Its Massive Rally?

Core Viewpoint - Nvidia is a key player in the rapidly growing AI market, with significant growth potential despite its already impressive performance [1][3]. Company Performance - Nvidia's stock price has increased approximately 1,230% over the past five years [2]. - From fiscal 2020 to fiscal 2025, Nvidia's annual revenue grew at a CAGR of 64%, rising from $10.9 billion to $130.5 billion [2]. - The adjusted gross margin expanded from 62.5% to 75.5%, while adjusted net income grew at a CAGR of 83%, from $3.6 billion to $74.3 billion [2]. Market Position - Nvidia holds over 90% of the discrete GPU market and is recognized for its superior AI GPUs [5]. - The company benefits from its proprietary CUDA programming platform, which optimizes AI applications for its GPUs [5]. - Strategic partnerships with major customers like Amazon Web Services, Microsoft Azure, and Google Cloud enhance Nvidia's competitive edge [6]. Future Growth Expectations - Analysts project Nvidia's revenue and earnings per share (EPS) to grow at a CAGR of 36% from fiscal 2025 to fiscal 2028 [7]. - At a stock price of $183, Nvidia is considered reasonably valued at 30 times next year's earnings [7]. Competitive Landscape - Nvidia faces competition from AMD, particularly with AMD's cheaper Instinct MI300X GPUs, but Nvidia's Blackwell GPUs are still superior for large-scale AI workloads [6]. - Some of Nvidia's key customers are diversifying their AI infrastructure by forming new deals with AMD, indicating a potential shift in market dynamics [10]. Regulatory and Market Risks - U.S. regulations have restricted Nvidia from shipping certain GPUs to China, which accounted for approximately 17% and 13% of its revenue in fiscal 2024 and fiscal 2025, respectively [9]. - The AI market's growth may be hindered by tighter government regulations and potential economic slowdowns, which could impact GPU purchases by major AI companies [11][12].