Nvidia (NVDA) has been the face of the AI revolution. Since the launch of ChatGPT in late 2022, shares have skyrocketed nearly tenfold. That kind of return made Nvidia the undisputed winner of the new tech cycle.
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But in recent months, the shine has dulled. Since October 2024, Nvidia stock is up just 28%. By comparison, a group of AI-related stocks that includes Taiwan Semiconductor (TSM), Micron (MU), and Seagate (STX) has risen more than twice as much. Even energy and infrastructure stocks powering AI data centers have outpaced Nvidia, with gains above 60%.
Nvidia Faces Questions Over Weak Spots
On the surface, Nvidia has done little wrong. Its last earnings report beat expectations on revenue and guidance. Customers are still desperate to secure its GPUs. Yet, despite all the positives, investors seem cautious.
Some blame politics. The Trump administration has forced Nvidia and AMD (AMD) to hand over 15% of their AI chip sales in China to the U.S. government. Reports also suggest Chinese companies are facing more restrictions in buying Nvidia products. While those headlines could weigh on sentiment, the stock hasn’t crashed. In fact, it even rose after the White House confirmed the China arrangement.
GPU Prices Are Dropping
Another explanation could be falling rental prices for GPUs. Data centers that once paid nearly $3 an hour to rent top-end Nvidia chips are now paying closer to $2. The company’s new Blackwell line is more efficient, which naturally lowers costs, but it also means Nvidia’s grip on pricing power may be slipping.
The GPU market remains strong, yet investors are asking whether demand is leveling out. A cooling rental market suggests buyers are becoming more cautious about overpaying for computing power.
Intel Partnership Creates New Curiosity
This week, Nvidia’s $5 billion investment in Intel sent shockwaves through the chip world. The companies will co-develop new chips for both PCs and data centers, creating an alliance that could shift the balance of power.
The deal gave Nvidia stock a short-term bump, rising over 3% on Thursday. But it also raises questions. If Nvidia really had limitless growth ahead, would it need Intel at all? Or is this a sign that even the leader of the AI chip race is hedging its bets?
Is Nvidia Stock Simply Catching Its Breath?
Nvidia’s underperformance does not mean collapse. Shares are still near record highs, and the company is far ahead of rivals in GPU design. Bespoke Investment Group called the weakness a “narrative test” that could set up the next rally.
For investors, the puzzle is a bit frustrating. Is Nvidia stock warning of cracks in the AI boom, or is it just pausing before its next surge? The market usually figures it out before anyone else.
Is Nvidia a Good Stock to Buy?
Wall Street analysts remain firmly bullish on Nvidia stock. Out of 38 analysts weighing in over the past three months, 35 recommend a Buy, two suggest a Hold, and only one calls it a Sell. This gives the chipmaker a “Strong Buy” consensus rating.
The average 12-month price target for Nvidia is $211.69, representing a 20% upside from its latest price.
