Nvidia (NASDAQ: NVDA) shares have risen just shy of 30% in 2025, but the stock has pulled back in recent weeks amid concerns over a potential artificial intelligence bubble.
Some analysts view this weakness as a buying opportunity, as the AI buildout still appears to be moving at full speed despite broader market hesitation.
Nvidia makes graphics processing units, or GPUs, which are accelerated computing units capable of performing multiple tasks in parallel, making them well suited for heavy workloads.
Those workloads include processing gaming graphics, engineering simulations, drug discovery, cryptocurrency mining, and most significantly, artificial intelligence model training and deployment.
Nvidia’s GPUs have been the most popular computing unit option since the AI arms race began in 2023, driven by both the power of the hardware and the strength of its supporting technology stack.
Chief rival AMD has offered competing GPUs, but its supporting technology has not matched Nvidia’s, leaving it behind in the race for AI infrastructure dominance.
AI hyperscalers, many of whom are tired of paying premium prices for Nvidia’s products, are partnering with companies like Broadcom to design custom AI chips in-house, though these alternatives perform best only under properly configured workloads.
Nvidia CEO Jensen Huang stated in the company’s Q3 earnings release that Nvidia is “sold out” of cloud GPUs, with Q3 FY2026, ended October 26, recording $51.2 billion in data center product sales.
Nvidia projects annual data center capital expenditures will rise from $600 billion in 2025 to between $3 trillion and $4 trillion by 2030, representing a compounded annual growth rate of at least 38% at the low end of that projection.
Wall Street analysts expect Nvidia’s revenue to grow 48% next year, and with the stock currently trading at 36 times forward earnings, the company appears fairly valued relative to its growth trajectory.
Applying a more conservative 30% growth estimate, which would also allow Nvidia’s valuation to continue moderating, the stock would be priced at approximately $221 by the end of 2026.
That projected gain positions Nvidia as a strong candidate for investors looking to buy and hold throughout 2026 and into subsequent years, provided the AI capital expenditure cycle continues as forecast.
