Nvidia (NVDA) stock fell 9% last week, capped off with solid Q4 2024 earnings but poor Q1 2025 outlook. The fall would send Nvidia out of the $3 trillion market cap fall briefly, placing it behind Apple (AAPL) and just ahead of Microsoft (MSFT). Nvidia guided for a gross margin of roughly 71% for the first quarter, lower than its 73% gross margin in the fourth quarter. Despite the earnings beat, investors worry that the stock may fall further, sending market cap down as well.
On Friday, NVDA shares slightly rebounded, giving investors hope in the stock. So far in 2025, Nvidia shares have lost more than 12% of their value. Investors in the company are concerned about how export controls, tariffs, more efficient artificial intelligence models, and an overall slowing pace of growth will affect their shares. While the dip is worrisome, optimism remains around Nvidia and the AI industry as a whole.
How Does Nvidia’s Future Look?
Nvidia stock’s drop Thursday puts shares down 12% over the past five trading sessions. Right now, Nvidia (NVDA) still has a median price target of $175 per share, which would be a 33% jump from where it stands now. With Q4 again outperforming, the stock has a 67% upside with high-end projects hitting $220. However, this latest setback could prolong that upside.
Playground Global’s Sasha Ostojic told CNBC’s “Squawk Box” on Friday that the fundamentals of Nvidia still appear strong despite the recent price action and that the company’s “executing as well as it could.” Furthermore, Bernstein analyst Stacy Rasgon wrote to investors Thursday, “Gross margins at 71% might be a minor nitpick, but we won’t argue that getting product out the door should be the primary consideration at the moment given demand seemingly remains off the charts…”
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Despite Nvidia taking a tumble on Thursday, there is still overall faith in the stock to perform well upon its next quarterly earnings report. “Any dips and spikes — especially short-term — are based on sentiment and perception, not necessarily on fundamentals,” added Playground Global’s Ostojic, who owns the stock.