Nvidia (NVDA) is a semiconductor giant that has been at the forefront of the artificial intelligence (AI) revolution. After surging over 1,200% between October 2022 and September 2024, Nvidia stock currently trades 20% below all-time highs as it wrestles with headwinds, including international trade tensions and competitive threats. 

The decline in NVDA stock comes at a pivotal moment as the semiconductor industry grapples with new tariffs on China, and the pending levying of tariffs on Mexico and Canada. The tech heavyweight is also processing the implications of DeepSeek’s advancement in the AI space. With these hardships in mind, Seeking Alpha reported on Feb. 3 that Nvidia was “flirting” with its 6-month lows. 

The direct impact of new tariffs on semiconductor imports appears limited as it affects less than 10% of U.S. semiconductor imports. Alternatively, the trade war could impact the supply chain in verticals such as AI server assembly and data center infrastructure. 

So, let’s see if Nvidia is a good stock to own at the current valuation. 

Is Nvidia Stock a Good Buy Right Now?

Valued at a market capitalization of $2.9 trillion, Nvidia is among the largest companies in the world. It designs and produces advanced graphics processing units (GPUs) and computer chips. Over the years, Nvidia has evolved into a powerhouse in verticals such as artificial intelligence and high-performance computing. 

Its portfolio of products powers everything from gaming PCs and workstations to data centers and self-driving cars. Nvidia’s technology is crucial in AI applications, where its specialized chips accelerate complex computations. 

As stated above, the drawdown in Nvidia stock can be attributed to the emergence of DeepSeek, a China-based AI platform, and new international trade restrictions. However, the tech stock has gained over 70% in the past 12 months despite recent challenges. 

DeepSeek claimed it created a high-performing large language model for just $6 million, raising concerns about Nvidia’s future earnings potential. Over the last two years, Nvidia has experienced strong demand from Big Tech giants, allowing it to increase sales from $26.9 billion in fiscal 2022 to $61 billion in fiscal 2024. In the last 12 months, its revenue has totaled $113.3 billion, an increase of 152.4% year over year. 

In fiscal Q3 of 2025, Nvidia almost doubled its revenue to $35.1 billion while its net income grew 109% to $19.3 billion. Nvidia ended Q3 with $38.5 billion in cash, while its free cash flow stood at $16.8 billion. 

In the quarter ending in October 2024, Nvidia’s data center revenue surged over 100% to $30.8 billion, accounting for most sales. Its leadership in the GPU segment allows the company to benefit from competitive moats such as pricing power. For instance, its gross margins in Q3 rose to 74.8%, up from 53.6% two years back. 

Is NVDA Stock Undervalued?

Nvidia’s growth story is far from over, given consensus estimates. Wall Street forecasts Nvidia’s sales to rise from $129.3 billion in fiscal 2025 to $196.3 billion in 2026. Adjusted earnings are forecast to expand from $2.95 per share in 2025 to $4.45 per share in 2026. 

So, priced at 26.7x forward earnings, Nvidia stock is reasonably valued, especially if it can keep growing earnings over the next three years. Out of the 43 analysts covering Nvidia stock, 37 recommend “Strong Buy,” two recommend “Moderate Buy,” and four recommend “Hold.” The average target price for NVDA stock is $178, around 50% above the current trading price.