TLDR

Table of Contents

Bernstein analyst Stacey Rasgon predicts Nvidia will sell all chips it can produce this year
Nvidia stock has fallen 19% in the last three months and is down 18% this year
Current valuation at 23x forward earnings is below 5-year average of 40x
Strong AI chip demand continues, with OpenAI reporting infrastructure strain
Market concerns about Trump tariffs on semiconductor imports are weighing on the stock

Nvidia Corporation, the leading AI chip manufacturer, has experienced a challenging start to 2025 despite continued strong demand for its products. The stock has fallen 19% over the past three months and is down 18% year-to-date, closing at $108.78 in recent trading.

According to Stacey Rasgon, a respected chip analyst at Bernstein, Nvidia is poised to “sell everything it can get out the door this year.” During a recent CNBC interview, Rasgon emphasized that the company’s revenue will only be limited by supply constraints, not demand.

The analyst noted that investors appear to be “the only ones” worried about AI chip demand. Meanwhile, major buyers continue to increase their capital expenditure forecasts for AI infrastructure.

Valuation Becomes More Attractive

After its recent pullback, Nvidia’s valuation has become more reasonable compared to historical levels. The stock currently trades at 23 times forward earnings, well below its five-year average multiple of 40 times, according to FactSet data.

Rasgon suggests that if analysts’ average estimates are “anywhere close” to accurate, the valuations of most AI chipmakers, including Nvidia, Broadcom (AVGO), and Marvell (MRVL), are “pretty attractive.” He added that for investors who believe AI growth will continue, these valuations are “incredibly attractive.”

Market analysts have been steadily increasing their expectations for Nvidia. Melius Research analyst Ben Reitzes noted that consensus estimates for Nvidia’s 2026 earnings have been revised upward by 37% since early July 2024.

Tariff Concerns Weighing on Share Price

A major factor in Nvidia’s recent stock decline appears to be market uncertainty surrounding potential tariffs on semiconductor imports. President Donald Trump’s upcoming tariff announcement has created anxiety among investors in the chip sector.

The stock has been moving downward alongside the broader market amid these concerns ahead of a Wednesday deadline for new levies. After five consecutive days of losses, Nvidia shares rose 1.6% on Tuesday, showing some signs of stabilization.

It remains unclear whether sector-specific duties on chips will be included in the broader tariff announcement. Trump has previously indicated that levies on semiconductors would follow “down the road” from his plan for reciprocal tariffs.

Strong Demand Fundamentals Remain

Despite market concerns, there is substantial evidence of robust demand for Nvidia’s chips to power artificial intelligence technologies. Companies like OpenAI, creator of ChatGPT, continue to report growing demand for their AI products.

OpenAI CEO Sam Altman recently highlighted that the company is struggling to handle infrastructure strain from the popularity of its image-generation tool. He mentioned the company is actively seeking access to additional third-party chips.

This real-world demand stands in contrast to the stock’s recent performance.

As Reitzes from Melius Research observed, “There was a time in the AI trading game that investors were willing to listen to our views on ‘future earnings power,’ but things changed fast.”

The market appears to have shifted focus from long-term AI growth potential to near-term geopolitical risks.

If semiconductors are excluded from the upcoming tariff announcement, analysts suggest Nvidia shares could experience a relief rally. However, this would depend on Trump not hinting at future actions specifically targeting the semiconductor industry.

Other major chip manufacturers have also felt pressure from these concerns. Advanced Micro Devices (AMD) and Broadcom (AVGO) have shown similar trading patterns in recent sessions.

For long-term investors, the current valuation may present an opportunity if the fundamental AI demand thesis remains intact. With consensus estimates continuing to rise despite share price weakness, the disconnect between market sentiment and business fundamentals appears notable.

Nvidia’s next earnings report will be closely watched for confirmation of the strong demand narrative described by analysts like Rasgon, as well as any guidance regarding potential tariff impacts on the company’s global supply chain and customer base.

The recent price action suggests that while short-term volatility may continue, especially around policy announcements, the longer-term AI computing trend that has powered Nvidia’s growth remains firmly in place according to industry observers.

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