Investors haven't had many chances to consider buying shares of the artificial intelligence (AI) leader Nvidia (NVDA 2.94%) on a big dip over the last several years. But now is one of those times. In fact the recent pullback in Nvidia shares is the largest drop from a recent high in the last two years. Shares are down 20% year to date, and 28% off a January high.
There are many reasons stocks drop. Company-specific news, investors rotating away from one sector toward others, and general risk angst are a few. It looks to be a combination of things for Nvidia shares right now. The question for investors is whether it provides a rare opportunity to juice future gains, or if it's a sign that Nvidia's days of outperformance are over.
NASDAQ: NVDA
Key Data Points
Sales might take a hit
Even with the recent decline, Nvidia shares have soared about 380% in the last three years. The surge higher came as the company's advanced semiconductor chips became the standard for companies anxious to expand compute power in data centers constructed to support building and training AI models.
But recent concerns over export restrictions have some investors worried about Nvidia's sales growth. The U.S. government has restricted the export of certain high-performance chips to China in the name of national security concerns. That limits the sale of its most advanced graphics processing units (GPUs) to some extent.
Fears triggered by news that China's DeepSeek developed a large language model (LLM) at a fraction of the cost also caused concern that AI infrastructure spending would decline. Investors see risk in how Nvidia navigates these challenges.
Nvidia stock is on sale
Many of the largest technology companies have stated intentions to continue to invest heavily in data centers, though. That makes the current Nvidia sell-off an opportunity for long-term investors.
The stock has dipped nearly 30% off its January high. Smart investors will look at it like any other large purchase in life. Buy quality while it's on sale. It's not just that the stock has dropped meaningfully off highs, either. Shares of Nvidia are now looking like a bargain based on common metrics.
A healthy breather
Sales growth in its data center segment has, in fact, slowed. The company is predicting about 65% overall year-over-year sales growth in the current quarter. That's amazing growth, but it compares to the 115% jump seen in its fiscal 2025 year ended Jan. 26.
Nvidia also has a steady flow of powerful new platforms being released. Its Blackwell architecture has now entered full production. That will be followed by the Rubin GPU and central processing unit (CPU) package for AI training and inference due out in 2026.
The pullback in shares looks to be a healthy breather. As with most fast-growing stocks, investors bid Nvidia shares higher in anticipation of its growth prospects. But its forward price-to-earnings (P/E) ratio now sits at about 24.
That's well below the 10-year average P/E of 30 for the Nasdaq Composite index. Nvidia still has plenty of growth ahead of it beyond its data center segment, too. Its gaming division alone brought more than $11 billion in sales over the past fiscal year. The robotics and automotive segment has also been steadily growing. That should only continue as humanoid robots and autonomous driving products become more mainstream.
Investors can now buy stock in a great company at a very fair price. It's an opportunity that shouldn't be missed.
