It’s been a rough start to the year for Nvidia (NASDAQ: NVDA) shareholders. As of this writing, shares are down about 12% year to date and 20% below its January highs. The news from the company must be bad, right?
Well, not exactly. Late last month, Nvidia reported fourth-quarter and full-year earnings for its fiscal 2025 period, which ended Jan. 26. The news was good, not bad. Nvidia impressed analysts and investors once again by exceeding both top- and bottom-line estimates. Guidance called for another jump in revenue in the current quarter to a record $43 billion. So, let’s look at what has the stock plunging in 2025.
Some of the same things that have driven the Nasdaq Composite into correction territory have caused fear and uncertainty around Nvidia stock. The Trump administration has announced — and changed — several applications of import tariffs that could affect Nvidia’s business. On top of that, national security concerns have raised the prospects for more export restrictions on Nvidia’s powerful artificial intelligence (AI) chips.
The tariffs themselves could have both direct and indirect implications for Nvidia. There are concerns that tariffs could hinder economic growth and create an inflationary environment. Either of those situations could negatively impact semiconductor chip sales. After all, if a company building out data center capacity believes returns on investments will be impacted, it may very well reduce or delay those investments.
Nvidia’s share price skyrocketed over the last 18 months as investors forecast impressive revenue growth to continue. It’s been nothing short of amazing. Sales began to soar in 2023. Revenue jumped 126% in fiscal 2024, ending Jan. 28, 2024. It didn’t slow down in fiscal 2025, either. Growth of another 114% for that period ended this January, and the stock continued to run higher.
That is, until recently.
The 22% drop from its January high mark might just be a great opportunity for those who feared they missed out on owning Nvidia stock. As of this writing, it was trading at a price-to-earnings (P/E) ratio of just about 25 based on calendar year 2025 earnings. That’s pretty attractive compared to the 10-year average P/E of 32 for the Nasdaq-100 index.
That’s its lowest level since earnings estimates skyrocketed early last year. The stock itself has more than doubled since the start of 2024.
Nvidia still has plenty of opportunities for growth. Barring any major development of a trade war or recession, revenue should increase about 50% this year. That’s mostly driven by the Blackwell AI architecture, which is now in full production. There are many business development possibilities beyond that.
