Nvidia’s stock has taken a hit this week, but it could be an opportunity for long-term investors. Despite delivering a highly anticipated quarterly report on Wednesday, with continued strong growth in data center revenue and an optimistic outlook from CEO Jensen Huang, the stock has dropped more than 13% over the past five days. This follows a stellar 171% return in 2024, but the recent decline could be seen as a chance to buy into the company’s long-term potential.
Although Nvidia exceeded its previously forecasted revenue of $37.5 billion for the fourth quarter, reporting $39.3 billion instead, investors are focusing on future growth and when it might slow. Nvidia expects sales of $43 billion in the current quarter, representing slower growth compared to the mid-teens pace seen in 2024.
Additionally, Huang highlighted concerns in the conference call about slower data center sales in China, which have been impacted by export controls, and noted increased competition in the Chinese market. Another worry for investors is a slight dip in profitability, with expected gross margins of around 71% in the current quarter, compared to 75% in the fiscal year ending January 26.
Despite these concerns, Nvidia continues to show impressive growth, particularly in the data center business, and its automotive and robotics segments are also gaining traction. While these newer segments are still smaller compared to data center AI sales, they could drive Nvidia’s next phase of growth. Investors should be cautious about betting against the company.
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