David Jagielski, The Motley Fool

Wed, Jun 18, 2025, 2:45 AM5 min read

• Shares of Nvidia fell below $100 earlier this year due to trade concerns.

• Now, however, the market is at around all-time highs, and so is Nvidia's stock.

• The business has been fairly resilient and last quarter its sales rose by 69%.

• 10 stocks we like better than Nvidia ›

Shares of Nvidia (NASDAQ: NVDA) have been fairly volatile this year. Trade-related concerns weighed down the stock a few months ago but those issues appear to be in the rearview mirror with the stock back to around its all-time highs. The company's cutting-edge artificial intelligence (AI) chips are crucial for many tech businesses deploying next-gen technologies and pursuing AI projects, and that has made it one of the best growth stocks to own in recent years.

But with question marks still looming about what lies ahead for the global economy, is Nvidia's stock still a good buy at its current levels, or are you better off waiting for a drop in price before adding it to your portfolio?

Nvidia is the leading AI chipmaker in the world. That has allowed it to command high margins for its products, which enabled it to grow its bottom line at an incredibly fast pace. While many growth stocks are able to grow their sales at impressive rates, what stands out about Nvidia is its earnings growth, which outpaced its top line in recent years.

Arguably, the stock isn't even that expensive. While its market cap may be around $3.5 trillion, it still trades at a fairly modest forward price-to-earnings (P/E) multiple of 33 (based on analyst estimates). Although that's not exactly cheap, it's not that expensive either, given just how dominant the business is and how quickly it has been growing. The average stock on the S&P 500 trades at 22.9 times its future earnings, and Nvidia surely doesn't fall into the category of "average" -- some premium is justifiable here.

A risk for investors is that by waiting for a dip as Nvidia's earnings continue to grow, the stock may end up rising even if its P/E ratio doesn't increase. That's why it may not make sense to wait right now.

The best argument for waiting is that with the S&P 500 back around record levels, there may be too much optimism and bullishness priced into the overall markets, and Nvidia is benefiting from that. The company still faces considerable uncertainty about trade restrictions involving one of its key markets, China. And it's not even going to include it in forecasts due to the uncertainty.