Don’t be fooled: Nvidia’s sale is a screaming buying opportunity

Nvidia (NVDA 3.54%) the stock has led the AI ​​stock boom since the launch of ChatGPT, but now there are legitimate questions about whether that rally still has steam.

After the company reported earnings on Aug. 28, the stock fell, even though it beat analysts’ expectations, a sign perhaps that Nvidia’s valuation has outpaced its business growth. Last week, the stock fell again, first on a report that Nvidia later denied that the company had been subpoenaed by the Justice Department. Stocks then fell another 4% on Friday in response to a weak jobs report.

As a result, the stock is down more than 18% from before it released its fiscal second quarter 2025 earnings report. Sentiment on the stock may be down, but the selloff is starting to look like a great buying opportunity . Here’s why.

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Nvidia is cheaper than it looks

Nvidia is significantly cheaper than it was a few weeks ago, but the stock is still expensive by traditional standards, trading at a price-to-earnings ratio of 49.5.

However, Nvidia is still growing at a blistering pace, with adjusted earnings per share more than doubling in the second quarter and expected to double again in the third quarter.

Analyst consensus currently calls for the company to generate adjusted EPS of $2.84 this year, equal to a forward P/E of 36, on par with its Magnificent Seven peers such as Apple and Microsoft.

Analysts have also consistently underestimated Nvidia’s earnings growth, so it looks like the company will beat that forecast.

Looking ahead to next year, Nvidia also looks well-positioned for continued growth, as it plans to ramp up its Blackwell platform in the fourth quarter and expects that growth to continue through 2025.

The sale seems unjustified

Nvidia shares are down 18% in just six sessions, but if you look closely at the news over that period, nothing seems to justify such a decline.

Shares of Nvidia fell 6.4% after the report, apparently guidance was not as strong as some investors had hoped and its gross margin fell sequentially. However, the quarter was still strong overall and beat analysts’ estimates.

Over the next week, shares fell 9% on Tuesday. There was no real news on the stock during the day, but after hours Bloomberg reported that Nvidia has been subpoenaed by the Department of Justice. Rumors of that report seemed to have sparked the selling. However, Nvidia later said it had not received any communication from the DOJ.

Finally, Friday’s slide also seems misunderstood. Nvidia operates in a cyclical sector, but the momentum in generative AI is much stronger than a typical cyclical expansion, and even with weak job growth in August, the unemployment rate is still low at 4.2%. Panic over a disappointing jobs report pushed Nasdaq Composite down 2.6% on Friday, seems overkill.

The business is more resilient than it seems

Finally, Friday’s selloff and broader stock volatility on macro news indicate that investors believe its momentum could easily be undone.

However, Nvidia dominates the market for data center GPUs, the components used to run generative AI models, and demand for these chips won’t be easily quashed.

Big tech companies like Microsoft, Alphabet, Meta platformsand adze they all affirmed the importance of building their AI infrastructure, calling it a top priority and insisting that the consequences of underinvesting in the new technology are far greater than overinvesting in it.

These “Magnificent Seven” companies have tens of billions of dollars to spend on AI infrastructure, and minor economic headwinds won’t deter them from doing so. Even a minor recession seems unlikely to dampen the trajectory of AI spending.

That should reassure investors that Nvidia can maintain its strong growth rate even if the economy slows.

With the stock price falling for largely unwarranted reasons, this is yet another reason to take advantage of the selloff and buy the dip in Nvidia.