If you invested in artificial intelligence (AI) stocks at virtually any point during 2023 or 2024, chances are you have seen some gains. But if you've been investing in AI stocks this year, well, that's a different story.
Throughout 2025, a number of things have taken their toll on the technology sector, dampening enthusiasm around the AI trend. In the beginning of the year, Chinese start-up DeepSeek shocked investors around the world after claiming it could build and train AI models at parity with ChatGPT and other leading platforms but at a fraction of the cost.
More recently, President Donald Trump's tariffs and the subsequent trade negotiations have brought a wave of uncertainty around how these policies will impact the prospects for high-growth businesses.
This is all to say that investors have been presented with a lot of uncertainty this year. And one stock that has been particularly punished during this period is Nvidia (NVDA -0.99%). At one point, shares of Nvidia had dropped 30% year to date, resulting in a market cap loss of nearly $1 trillion.
Nvidia stock is back at breakeven for the year as of mid-May, but for the remainder of 2025, Nvidia stock should soar and ultimately reclaim its position as the most valuable business in the world.
Nvidia reports earnings on May 28: Here's what to look out for
When Nvidia reported earnings for the fourth quarter and full year of fiscal 2025 (ended Jan. 26), management provided the following financial guidance: first-quarter revenue of $43.0 billion (plus or minus 2%) and gross margin of 70.6% (plus or minus 50 basis points).
While financial guidance can be a helpful tool to hold management accountable, I would not be overly focused on these figures right now. After Nvidia's management made these forecasts, the world was introduced to new tariff policies, and export controls around China -- a core market for Nvidia -- remain a fluid situation.
This is all to say that if Nvidia misses its guidance or only achieves the lower end of its financial outlook, there are clear reasons for such an outcome. Longer-term, though, I'm quite confident in Nvidia's growth prospects.
Image source: Getty Images.
Why Nvidia stock will soar through the end of the year, regardless of the Q1 report
Over the last several weeks, investors have gotten a preview into the roadmaps for a number of other leading tech companies -- many of which use Nvidia's chips. Microsoft, Amazon, and Alphabet did not lower their capital expenditure (capex) forecasts for this year -- collectively budgeting more than $250 billion in spending, much of which will go to AI infrastructure. Meta Platforms even raised its capex outlook for the year to as much as $72 billion.
To me, these trends suggest the AI industry's biggest players are expecting robust demand for their respective products and services, and that means demand for Nvidia's chips should remain intact.
Data by YCharts.
Even if Nvidia's Q1 report ends up appearing underwhelming, my prediction is that its outlook will be strong. Right now, the stock's forward price-to-earnings (P/E) valuation is well below its peak levels from the past year.
Investors must avoid focusing excessively on the short-term headwinds Nvidia is facing and losing sight of the big picture. So long as big tech is spending on AI infrastructure, Nvidia's dominant market share means the company is capturing a sizable chunk of that spending.
For these reasons, the bullish narrative around this AI darling should recharge in the second half of the year.
