Good news keeps coming for Nvidia but not the stock. Time to buy?
Shares of Nvidia have started the new year off flat as Wall Street skeptics ignore a string of positive developments that continue to boost our confidence in the stock and inform our advice for investors with and without positions. The most recent update came early Thursday morning, when Bloomberg reported that China will indeed allow the import of Nvidia’s artificial intelligence H200 chips. Reuters reported that, to hedge against the ongoing trade uncertainty between the world’s two largest economies, Nvidia has revised payment terms for Chinese buyers, including requiring upfront payment, forbidding cancellations, and barring changes to the system configuration once orders are placed. Nvidia shares dropped more than 2.5% despite the news. During Thursday’s Morning Meeting, Jim Cramer blamed the decline on the simple fact that shares had rallied more than 10% since their mid-December lows coming into the session. The U.S. had previously restricted exports of advanced AI chips due to national security concerns over what China might do, militarily, with the world’s most advanced AI hardware. That said, the new Vera Rubin platform, unveiled earlier this week, means that the H200 is now two generations behind what American companies have access to. Some industry observers have raised concerns about providing China too much raw compute, even if less powerful, arguing that it is the aggregate compute that will ultimately matter, more so than having the latest and greatest. While time will tell whether the move to allow more chips to China is the right one from a national security perspective, the news points to upward revisions to Nvidia earnings estimates. That’s because sales to China, which management has consistently kept out of its financial forecasts, must now be factored in by analysts. On Monday evening, Nvidia CEO Jensen Huang’s Consumer Electronics Show address, which included the disclosure that Rubin was in full production, was also packed with many other bullish remarks regarding partnerships as well as an emphasis on the company’s role in autonomous vehicles, robotics, and physical AI. Jensen also said that AI advancements will require the replacement of some $10 trillion worth of traditional computing infrastructure. During a JPMorgan fireside chat at CES the next day, CFO Colette Kress said the company’s $500 billion sales guide, announced back in October, for calendar year 2025 and 2026 has “definitely gotten larger.” She said, “We have orders for Vera Rubin, and [are] focusing more and more in terms of thinking out a full year of volume of what you may need in terms of Vera Rubin. So, we’re in a great position in getting better understanding.” What all this means for investors in Nvidia is clear. Despite its $4.5 trillion market cap, the stock still has a lot of growth ahead of it. The world outside Silicon Valley only really woke up to how advanced AI had become with the launch of ChatGPT in 2022. The creator of ChatGPT, OpenAI, quickly emerged as the company to be in generative AI, or artificial intelligence that creates things. Since then, privately held OpenAI has flourished, with a reported $850 billion valuation. Nvidia was crucial to the ChatGPT story as its powerful chips train and run the model. Beyond chatbots, we are looking forward to what Jensen described as physical AI, which is where things start to really feel like sci-fi. Physical AI is about AI that understands and abides by the laws of physics. That means that not only is it usable for realistic simulations in virtual environments, but also the kind of AI needed to understand how a car or robot can and should operate in the real world, without expensive prototyping or how a factory should operate, using a digital twin to run tests before actually building anything. So, with the Rubin ramp on track for sales to begin in the back half of the year and China now back on the table, the logical question for any investor to be asking themselves is whether it is time to buy Nvidia stock For those with an existing position, we would probably hold off at the moment because other than the upcoming earnings release, set for late in the day on Feb. 25, we lack any real catalyst to make us think that a stock break to the upside is imminent. We do see further upside in shares, we just don’t have an event horizon that says to us that existing shareholders should take on even more exposure here and now. NVDA 5Y mountain Nvidia 5 years For those without an existing position, on the other hand, this is an attractive level to start a small position, leaving plenty of room for further buys should we see any weakness from here. At $185, shares are trading at less than 25 times forward earnings before accounting for any upward revisions resulting from the China H200 authorization. That’s an 11-turn discount to the 5-year average forward valuation, and near the lower end of the range over the past decade. It’s even more attractive when considering that analysts see earnings growing at a 32% compound annual growth rate (CAGR) over the next three years, which translates to a growth-adjusted PEG ratio of less than one, which is considered to be highly attractive. The PEG is calculated by taking the forward P/E and dividing it by the growth estimates. On valuation alone, shares are attractive considering the years of growth we see ahead. From a technical perspective, it’s also an interesting setup because the stock has been consolidating for over five months – and in the final week of 2025, it traded back above the 50-day moving average. While consolidation could of course be met with a selloff, we would be betting on the next material move being to the upside given all the positive fundamental reasons. In that scenario, we would be looking for a move to the old high, around $212, or a move of nearly 15% from where we stand currently. That said, should we move lower, then the next level for those looking to step in or build a position would be around $167, the bottom of this five-month consolidation range. Bottom line For those with existing Nvidia exposure, there is no rush. Let’s see how things shape up closer to the company’s fiscal 2026 fourth quarter earnings release. For those yet to take a position, however, we think now is a good time to start one, getting just enough on to prevent any FOMO, or fear of missing out, should shares rise, while leaving room to add and reduce your overall cost basis, should shares trade lower. A move under $170 is the area we would expect to see more support come into the stock as it has over the past five-plus months. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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