Nvidia’s (NVDA) share price has struggled so far in 2025 following the emergence of DeepSeek AI and a mixed near-term outlook. Nevertheless, some believe that the chipmaker’s recent pullback is an overreaction due to a crucial but overlooked factor – the long-term profit potential of sovereign artificial intelligence. Indeed, nation-states have begun investing heavily in AI infrastructure, which will inevitably drive demand for high-powered chips made by Nvidia.
As Anjney Midha, a partner at a16z generator, noted on Yahoo Finance’s Opening Bid podcast, these infrastructure build-outs are just beginning. It is worth noting that the scale of these investments is massive. In fact, the European Union has set aside 200 billion euros for AI investments, while Microsoft-backed OpenAI (MSFT), Oracle (ORCL), and Softbank (SFTBY) have pledged up to $500 billion for an AI infrastructure project.
Unsurprisingly, Nvidia’s AI chips will be at the core of these build-outs, with countries like Canada and Denmark already announcing that they will use the company’s products to develop their AI infrastructure. As a result, while Nvidia’s near-term outlook may be mixed, the company’s long-term outlook remains bright, with CEO Jensen Huang and CFO Colette Kress highlighting the strong demand for Nvidia’s chips and the potential for improved margins later in the year.
Is NVDA a Good Stock to Buy?
Overall, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 38 Buys and three Holds assigned in the past three months. After a 54% rally in its share price over the past year, the average NVDA price target of $178.66 per share implies an upside potential of 46.7% from current levels.
