After a stellar run in recent years, Nvidia (NASDAQ:NVDA) stock is under pressure. Once a poster child for the AI boom, Nvidia stock price dropped by 23% from its all-time highs, leaving investors questioning whether the stock’s growth trajectory is sustainable. With its current market capitalization sitting at $2.86 trillion, the company is facing increased scrutiny over slowing revenue growth, expensive valuations, and a turbulent macroeconomic environment.
Goldman Sachs Turns Bearish on AI
Goldman Sachs (NYSE:GS) has become a prominent voice in the growing concern over the AI-driven tech trade. The investment bank issued several bearish notes this week, forecasting that the massive run-up in U.S. mega-cap tech stocks—referred to as the “Magnificent Seven”—could be over. According to Goldman’s analysts, decelerating earnings growth and the failure of big tech companies to react positively to earnings reports signal that the growth phase may be coming to a close.
Goldman strategist Paolo Schiavone highlighted that investors are increasingly focusing on long-term growth beyond 2025, which is contributing to a shift away from AI stocks. The firm has warned that Nvidia, along with Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and other big players, may experience further consolidation after years of price and valuation expansion.
Is Nvidia Stock Still a Good Investment?
Despite the pessimism in some circles, Nvidia continues to showcase impressive financial performance. The company’s fourth-quarter revenue reached a record $39.3 billion, marking a 78% increase year-over-year. Full-year revenue for fiscal 2025 soared to $130.5 billion, up 114% from the previous year. The Data Center segment, which powers AI applications, was a significant contributor, bringing in $115.2 billion for the year, a 142% increase.
Nvidia’s dominance in AI computing is undeniable, with its Blackwell architecture delivering a massive $11 billion in revenue during its first quarter. Demand for accelerated computing platforms, particularly those used in large language models and AI applications, remains exceptionally strong. As Jensen Huang, the company’s CEO, mentioned, the scaling of AI models is driving growth, and Nvidia’s technology is at the heart of that evolution.
However, Nvidia’s gaming segment, traditionally a key revenue driver, has seen some setbacks. While it grew 9% over the full year, the gaming segment saw an 11% decline in the fourth quarter due to supply constraints affecting GPUs. The automotive and professional visualization segments, on the other hand, showed strong growth, with automotive revenue jumping 55% annually and professional visualization up 21%.
The Outlook for Nvidia Stock
Looking ahead, Nvidia is projecting strong performance for the first quarter of fiscal 2026, with expected revenue of around $43 billion and gross margins of approximately 71%. The company’s cash position has also strengthened significantly, reaching $43.2 billion—an increase from $26 billion a year ago—allowing for substantial shareholder returns, including $33.7 billion in share repurchases during fiscal 2025.
With major partnerships with companies like Amazon Web Services (NASDAQ:AMZN), Google Cloud (NASDAQ:GOOG), Microsoft Azure (NASDAQ:MSFT), and automotive giants Toyota (NYSE:TM) and Hyundai (HYMLF), Nvidia is well-positioned to capitalize on the growing demand for AI applications. Despite the concerns from some analysts, the company’s leadership in AI and data center technologies positions it as a key player in the ongoing global AI revolution.
Analyst Recommendations for Nvidia Stock
Out of the 44 analysts covering Nvidia stock, 38 recommend a “Strong Buy,” while two suggest a “Moderate Buy,” and four advise a “Hold.” The average target price for Nvidia stock is $177.59, which implies an upside potential of 51.4% from current levels. Given its strong market position and the continued growth of AI, many analysts believe Nvidia’s long-term prospects remain solid, despite short-term concerns about valuation and market conditions.
Should You Sell Nvidia Stock?
As Nvidia faces challenges in the near term, including increasing competition and concerns over AI stock valuations, investors must weigh the potential for further downside against the company’s long-term growth prospects. While Goldman Sachs and other analysts have raised warnings, Nvidia’s strong financial results and dominant position in AI continue to support its future potential.
For investors who are risk-averse, it may be worth considering diversification or taking profits. However, for those with a long-term outlook, Nvidia remains a key player in the AI revolution, and its future growth may still offer significant rewards.
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