Nvidia (NASDAQ:NVDA) is discovering that the weight of expectations can be a heavy burden.
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Last month, the dominant AI chipmaker once again surpassed both revenue and earnings forecasts in its Q3 FY2025 report. Yet, in a market that now treats extraordinary as ordinary, the response was lukewarm, with the stock slipping slightly in the days that followed.
Investors could also have been spooked by Nvidia’s falling gross margins related to the shift to Blackwell, the prospect of increased U.S.-China tensions, or perhaps even larger macro concerns over saturation in the AI market.
Yet, top investor Yiannis Zourmpanos, who sits in the top 1% of TipRanks stock pros, remains unfazed by the recent performance. For him, it’s all part of the bigger picture.
“This pullback is a healthy consolidation phase, providing the stock with a necessary pause to absorb its recent gains and establish a stronger support base,” the 5-star investor opined.
Zoumpanos points to a number of reasons for this bullish take. For one, the data center segment continues to serve as an incredible engine of growth for the company, with the “performance and accelerating adoption of Hopper and Blackwell GPUs” providing additional evidence of its pole position in the AI revolution.
While margins did lessen somewhat due to Blackwell’s operational expenses, the investor expects these to settle in the mid-70s with a full ramp-up.
“This continued top-line boom with +70% gross margins is good for the stock in terms of valuation,” adds Zourmpanos.
The investor is also not bothered by a potential trade kerfuffle between the U.S. and China, as Nvidia has been diversifying revenue sources around the world, including with major partnerships in India and Japan.
On valuation, Nvidia’s price-to-earnings ratio of 55 stands out, but according to Zourmpanos, the stock still offers a staggering 1,744.91% premium on forward earnings.
“This disparity between current valuation and high growth premiums suggests a potential massive upside in upcoming quarters,” asserts the investor.
With a long-term horizon that “remains compelling,” Zormpanos rates NVDA shares as a Strong Buy. (To watch Zourmpanos’ track record, click here)
Wall Street analysts are also fully onboard. With 37 Buy and 3 Hold ratings, NVDA boasts a consensus Strong Buy rating. Its 12-month average price target of $176.14 translates into gains of ~22%. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
