George Budwell, The Motley Fool

Mon, Jun 2, 2025, 11:48 AM5 min read

• Nvidia stock has gained just 2.3% year to date despite delivering 69% revenue growth in its latest quarter.

• At 21.8 times projected 2028 earnings, the AI leader trades at a reasonable multiple for its supercharged growth profile.

• The fuss over export restrictions is masking the underlying strength of global AI demand.

• 10 stocks we like better than Nvidia ›

In a year where artificial intelligence (AI) continues dominating headlines and enterprise spending, one might expect the sector's undisputed leader to be posting spectacular gains. Instead, Nvidia (NASDAQ: NVDA) has delivered a surprisingly modest 2.3% return year to date as of this writing, barely outpacing the S&P 500's rather modest 0.32% advance in 2025. For a company that became synonymous with the AI boom, this restrained performance raises an intriguing question for growth investors.

The disconnect becomes even more puzzling when examining Nvidia's recent financial performance. The chipmaker just reported first-quarter fiscal 2026 results that would make most technology executives envious, with revenue surging 69% year over year to $44.1 billion and guidance pointing toward continued robust growth. Yet the market's tepid response suggests either excessive caution or a compelling buying opportunity.

At 21.8 times projected 2028 earnings, Nvidia trades at a reasonable multiple for a company delivering 69% revenue growth and dominating the AI infrastructure market. For investors willing to look past near-term headwinds, the combination of muted stock performance and accelerating fundamentals could represent one of 2025's most compelling value propositions in the technology sector.

The primary factor weighing on Nvidia's stock performance has been concerns about U.S. export controls limiting the company's access to the Chinese market. The restrictions, which took effect on April 9, 2025, resulted in a $4.5 billion charge in the first quarter and will cost the company an estimated $2.5 billion in first-quarter revenue and $8 billion in second-quarter revenue from foregone H20 chip sales due to the export restrictions.

While these numbers appear substantial, they demonstrate Nvidia's resilience rather than vulnerability. Despite being blocked from selling H20 products specifically designed for China's AI market, the company still managed to deliver $44.1 billion in quarterly revenue and guide toward $45 billion for the second quarter. This represents 50% year-over-year growth even with the China headwinds fully incorporated.