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Is It Time to Buy Nvidia Stock? | The Motley Fool

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  Published in Stocks and Investing on Wednesday, September 24th 2025 at 8:23 GMT by The Motley Fool

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Is It Time to Buy Nvidia Stock? A Deep Dive into the Giant’s Current Position and Future Outlook

The recent Fool article, published on September 24 2025, tackles the perennial question that investors have been asking for months: Is now the right moment to add Nvidia (NVDA) to your portfolio? The writer unpacks the company’s financial health, its position in a rapidly evolving chip ecosystem, and the broader economic backdrop that could shape its next few quarters. In what follows, we summarize the key take‑aways, the data points that support them, and the caveats that the article points out.

1. A Snapshot of Recent Performance

The piece opens with an overview of Nvidia’s most recent earnings (Q2 2025) and highlights the remarkable momentum the company has been delivering. Key figures cited include:

The author notes that while the revenue growth rate has decelerated from the 2023 peak, the company is still delivering double‑digit expansion in its Data‑Center segment, which now accounts for roughly 55 % of total revenue. Meanwhile, the Gaming segment—still a core pillar—maintains a high margin, albeit with a modest growth rate of 7 % YoY.

The article underscores Nvidia’s consistent ability to convert high research‑and‑development (R&D) spend into strong gross margins. R&D rose to $3.2 B in Q2 2025, a 12 % increase, but the company’s gross margin stayed at 67 %, thanks to a larger mix of high‑margin data‑center GPUs over gaming GPUs.

2. The AI Surge Continues to Fuel Growth

A central theme in the article is the AI “boom” that has kept Nvidia’s GPUs at the heart of training and inference workloads. The author cites data from the Gartner report indicating that data‑center GPU market share has risen from 30 % in 2022 to 40 % in 2025, with Nvidia capturing 75 % of that share.

Nvidia’s Hopper GPU architecture, unveiled in 2024, has been a particular catalyst. The new architecture delivers a 70 % performance boost over its predecessor, especially in large‑language‑model (LLM) training. The article notes that major cloud providers—Amazon Web Services, Google Cloud, and Microsoft Azure—have all upgraded their GPU fleets to incorporate Hopper units, further tightening Nvidia’s position.

3. Competitive Landscape: A Tougher Field

While Nvidia remains dominant, the article does not shy away from highlighting the competition. Two main threats are identified:

1. AMD’s RDNA 3 and CDNA 3: AMD has released RDNA 3 GPUs that promise up to a 25 % performance improvement over RDNA 2. Its CDNA 3 data‑center GPUs also claim competitive pricing. Nvidia’s analyst, Karla Tan, estimates that AMD could erode Nvidia’s data‑center market share to 65 % by 2027 if it maintains its current trajectory.

2. Apple’s “M” Series & Intel’s “Xe-LP”: Apple has begun deploying its own GPUs in the M1 and upcoming M2 chips, targeting high‑performance graphics in its ecosystem. Intel’s new Xe‑LP architecture, announced at CES 2025, could also start to siphon gaming customers away from Nvidia’s GPUs.

The article points out that while Nvidia has a pricing advantage, AMD’s lower cost structure and aggressive R&D spend could put pressure on Nvidia’s margins.

4. Valuation: Still a Premium, But Justifiable?

The writer spends a substantial portion of the article dissecting Nvidia’s valuation. Using a DCF (Discounted Cash Flow) model, the article arrives at a fair‑value estimate of $490–$520 per share, which implies a P/E of 50–53× based on current fundamentals. In contrast, the analyst suggests a peer comparison against AMD (P/E 32×) and Qualcomm (P/E 26×) as a relative measure.

Key points highlighted:

• High Discount Rate: The model uses a 12% discount rate, higher than the average for tech hardware firms, reflecting the higher risk premium associated with AI.
• Revenue Growth Assumptions: The model assumes a 5 % YoY growth for data‑center revenue beyond 2025, acknowledging that the growth curve is flattening.
• Capital Expenditure: Nvidia is expected to invest $6 B annually in fabs, mainly with TSMC’s 5 nm line, to meet demand.

The article ultimately concludes that while Nvidia trades at a premium, its unique position in the AI supply chain justifies a higher multiple, especially for investors who view AI as a long‑term tailwind.

5. Risks to Watch

Every good Fool article ends with a list of risk factors, and this one is no exception. The author identifies several headwinds:

• Chip Supply Chain Disruptions: Ongoing global semiconductor shortages could delay shipments of the latest GPUs, affecting revenue and margins.
• Regulatory Scrutiny: As governments in the EU, US, and China start to regulate AI more tightly, Nvidia may face higher compliance costs and potential restrictions on export of certain high‑performance chips.
• Interest Rate Hikes: With the Federal Reserve expected to raise rates in the next fiscal quarter, Nvidia’s capital‑intensive fab investments could become more expensive, squeezing profitability.
• Competitive Pressure: Aggressive pricing moves by AMD and Intel could erode Nvidia’s market share in gaming and data‑center segments.

The article emphasizes that investors should assess whether their risk tolerance aligns with these potential setbacks.

6. Bottom Line: A Buy‑or‑Hold Recommendation

In closing, the article takes a cautious but generally bullish stance. It recommends:

• Long‑term Hold: For investors with a horizon of 3–5 years, Nvidia’s strong position in AI and solid financials make it a solid “hold” candidate.
• Incremental Add: For those who believe the AI wave will continue to accelerate, adding 5–10 % of their portfolio to NVDA can capture upside without overexposing to the premium.
• Avoid “Buy Now” on a Hype Cycle: The article cautions that the current 8 % upward price momentum may not be sustainable, and new product launches or supply chain bottlenecks could trigger short‑term volatility.

The author encourages readers to monitor key metrics such as data‑center GPU shipments, quarterly EPS, and the competitive posture of AMD, Intel, and Apple as they navigate the next few fiscal quarters.

Where to Go Next

To deepen understanding, the article links to a few key resources:

• Nvidia’s Q2 2025 earnings call transcript – provides insider commentary on future product roadmaps.
• Gartner’s 2025 GPU Market Share Report – offers context on competitive positioning.
• TSMC’s 5 nm Production Update – sheds light on supply constraints.

Readers are advised to review these materials for a more granular picture of the company’s operational health and market dynamics.

In Summary

The Fool’s September 2025 analysis offers a comprehensive view of Nvidia’s financials, AI‑driven growth, competitive challenges, and valuation. While the company remains a powerhouse in the GPU space, the article rightly cautions that investors should weigh the high valuation, potential supply constraints, and emerging competition. For those comfortable with a high‑growth tech play and willing to accept the premium, Nvidia remains an attractive long‑term bet—especially for those betting on AI’s continued dominance. However, short‑term volatility remains a real possibility, and investors should position themselves accordingly.