Although the global battle for artificial intelligence superiority is only heating up, Jensen Huang-led Nvidia (NVDA) remains the clear star. NVDA shares are up an eye-popping 1,240% in the past five years and the company has seen its market capitalization soar to the gargantuan levels of $2.8 trillion. This has made Nvidia one of the most valuable companies in the world.

However, President Donald Trump’s tariffs, the emergence of the Chinese startup DeepSeek, and a new restriction on shipments of its H20 chips to China without a license, has resulted in Nvidia facing its first set of real challenges in recent years. Consequently, the stock is already down 15.2% on a YTD basis.

Adding to the concerns has been CEO Jensen Huang’s assertions that China is “very close” to the U.S. in terms of AI capabilities. Commenting further, Huang said, “They’re incredible in computing and network technology, all these essential capabilities to advance AI. They have made enormous progress in the last several years.”

So, that begs the question: Is Nvidia stock set for a prolonged downturn? 

Yes, the stock may be set for a further downturn, but it may not be prolonged. Why? Let’s have a closer look.

Nvidia Is Financially as Solid as Ever

Nvidia has demonstrated stellar financial momentum in recent years, with its top line and bottom line expanding at compound annual growth rates of 39.48% and 60.79%, respectively — underscoring its leadership position within both the semiconductor landscape and the broader artificial intelligence ecosystem.

In its latest quarterly release, the company once again surpassed analyst projections, maintaining its established trend of exceeding expectations. Nvidia reported all-time high quarterly revenue of $39.3 billion, a sharp 78% rise from the same quarter in the previous year. The data center business stood out as the primary engine of growth, contributing $35.6 billion — a substantial 93% year-over-year surge.

Earnings per share reached $0.89, reflecting a 71% increase from the year-ago period. This performance marked the ninth consecutive quarter in which Nvidia topped consensus earnings forecasts, highlighting the strength and consistency of its operational delivery. Nonetheless, a minor area of concern appeared in the company’s gross margins, which edged down to 73.5% from 76.7% a year earlier, signaling possible pressure from intensifying competition or rising input costs.

On the cash flow front, Nvidia delivered another robust performance. Operating cash flow climbed to $16.6 billion, well above the $11.5 billion recorded during the same quarter last year. The company ended the reporting period with a sizable cash balance of $43.2 billion and no short-term debt, giving it ample flexibility to pursue long-term strategic initiatives and navigate evolving market dynamics.

Overall, analysts are projecting forward revenue and earnings growth rates of 59.64% and 65.71% compared to the sector medians of 6.69% and 10.27%.

Encouraging Growth Drivers

As highlighted in my recent piece, Nvidia is making moves to mitigate the impact of tariffs while also looking to “significantly ramp up the distribution of Blackwell chips, with the GB200, Nvidia’s most advanced GPU designed for handling the most intensive AI tasks, being a primary focus.”

Notably, Nvidia’s management has demonstrated a clear strategic focus on scaling its operations in line with soaring AI-related demand. The rollout of its Blackwell platform, which is being adopted at an unprecedented pace, marks the company’s fastest product deployment to date. This is a reflection of robust demand from hyperscalers and AI-focused startups eager to leverage its latest hardware.

Equally significant, Nvidia has cemented deep alliances with all leading cloud infrastructure firms, including Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle Cloud, securing its position as a foundational layer of the modern AI stack. Reinforcing this commitment, the company recently disclosed plans to build up to $500 billion in AI infrastructure within the U.S.

Nvidia’s leadership in both product innovation and ecosystem integration suggests it is poised to continue benefitting meaningfully from the next wave of digital transformation.

Analyst Opinions on NVDA Stock  

Analysts have deemed Nvidia stock a “Strong Buy” with a mean target price of $166.10, which denotes upside potential of about 46% from current levels. Out of 44 analysts covering the stock, 37 have a “Strong Buy” rating, two have a “Moderate Buy” rating, four have a “Hold” rating, and one has a “Strong Sell” rating.