Although the artificial intelligence (AI) sell-off due to DeepSeek's innovation in generative AI model is short-lived, a few stocks are still at their peak. One of them is King Ai Nvidia (NASDAQ: NVDA)a company that provides the computing power required to train all of these AI models.
At the time of writing, NVIDIA is still down more than 10% from its 2025 high, although it is down more than 20% deep in the sell-off. I still think this slight sale price represents a great buying opportunity as the stock appears to soar after February 26.
On February 26, NVIDIA will report its fourth-quarter earnings for fiscal year 2025 (end on January 31). NVIDIA's earnings report has become an event as everyone is curious whether they want to continue publishing ridiculous growth figures. For the fourth quarter, management expects revenue of $37.5 billion, which will represent a year-on-year increase of 70%. Wall Street analysts firmly believe that NVIDIA is expected to grow by 73%, which is insufficient for its revenue forecast.
This is because Nvidia has a good record that exceeds expectations. In the third quarter, management expected $32.5 billion, but generated $35.1 billion. For the second quarter, they expected $28 billion, but generated $30 billion. Given how much money has been spent on AI in the past quarter, I would say Nvidia may have exceeded the $37.5 billion they set for themselves.
Nvidia's business is very powerful because of its best-in-class graphics processing units (GPUs) and software. Compared to CPUs, GPUs have a clear advantage: they can process multiple computations in parallel, resulting in greater computing power. This effect can be amplified by combining thousands of GPUs in a cluster.
While buildings for AI computing hardware are important in 2023 and 2024, 2025 will represent another peak in AI hardware spending. Some of the largest companies say that most capital expenditures in 2025 will go to AI hardware, and these numbers are very high. Meta Platform Plans to spend between $60 billion and $65 billion on capital expenditure this year, and letter The plan costs $75 billion. For reference, this is what the two companies' capital expenditures look like during the rolling 12-month period.
A lot of money will be spent in 2025, and Nvidia will benefit from this expenditure. However, the stock doesn't look like most of it.
Despite the promising 2025, Nvidia's stock does not look that expensive anymore.
Considering Wall Street analysts expect revenue to grow 52 times in fiscal 2026, 52 times cheaper and 30 times forward earnings, cheaper. Now, let's compare Nvidia's growth prospects and valuations with some other big tech companies.
From a forward earnings perspective, NVIDIA's stock ratio apple'sand Microsoftstocks. If Nvidia can maintain any level of growth by 2025, it looks absolutely effortless at these prices.
I believe NVIDIA will report results for the fourth quarter and may exceed expectations. Given the amount of spending its largest customer program this year vs last year, 2025 also appears to be a stunning year for NVIDIA. I wouldn't be surprised if the stock jumps to new all-time highs after earnings reports, which means investors have to take advantage of the sales price before it's too late.
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Randi Zuckerberg is a sister of former marketing development director, Facebook spokesperson, and Meta Platform CEO Mark Zuckerberg, and a member of the Motley Fools’ board of directors. Alphabet executive Suzanne Frey is a member of the Motley Fool board of directors. Keithen Drury has posts in letters and nvidia. Motley fool has a place and recommends letters, Apple, Meta Platform, Microsoft and Nvidia. Motley Fools suggest the following options: January 1, 2026, Microsoft $395 Phone, Short January 2026, Microsoft $405 Phone. Motley Fool has a disclosure policy.
AI Stock Sell: Before the surge on January 26, 1 incredible bargaining investor needs to be leveraged, originally published by Motley Fool