Is Nvidia an Undervalued Growth Stock or a Falling Knife?

Core Viewpoint - Nvidia is experiencing a significant decline in stock value despite its explosive growth in revenue and earnings, raising questions about whether it is an undervalued growth stock or a risky investment in a volatile market [5][11]. Group 1: Company Growth Metrics - From 2014 to 2024, Nvidia's stock surged 33,430%, with a revenue CAGR of 39% and an EPS CAGR of 58% from fiscal 2015 to fiscal 2025 [1]. - In fiscal 2025, Nvidia's revenue rose 114%, adjusted gross margin expanded to 75.5%, and adjusted EPS increased by 130% [6]. - Data center revenue surged 142% to $115 billion, accounting for 88% of total revenue [6]. Group 2: Market Dynamics - Nvidia's GPUs are essential for AI tasks, making it a key player in the booming generative AI market, with major clients including OpenAI, Microsoft, and Google [4]. - The company controls approximately 98% of the data center GPU market, maintaining a competitive edge over smaller rivals [12]. Group 3: Challenges and Outlook - Nvidia's stock has declined about 23% this year due to macroeconomic factors, including tariffs and trade tensions [5]. - Year-over-year growth rates are slowing, and gross margins are slipping, raising concerns about future performance [6][9]. - For fiscal 2026, Nvidia expects a 44% year-over-year revenue increase, with analysts projecting 54% revenue growth and 48% adjusted EPS growth for the full year [8].