Nvidia, a leader in artificial intelligence (AI) chips, has historically been a growth stock capable of multibagger returns. However, its recent first-quarter earnings report showed mixed signs, with sales growing 69% year over year but decelerating from the previous quarter. The company’s gross margins also shrunk, and net income fell by 15%. Regulatory challenges in China, where Nvidia was forced to take a $4.5 billion impairment charge due to restrictions on its H20 chips, are adding to the uncertainty.
Competition from homegrown Chinese rivals, such as Huawei, is another concern. Moreover, major customers like OpenAI are investing in their own custom chip design capacity to reduce reliance on third-party hardware suppliers. With a market cap of $3.4 trillion, Nvidia’s growth potential has decreased significantly, making it less likely to repeat its impressive past returns.
However, despite these challenges, shares remain reasonably affordable with a forward price-to-earnings (P/E) ratio of 32.4. Investors can expect Nvidia to eventually return some of its massive profits to shareholders through dividends and buybacks, which could support slow and steady stock price appreciation. While it may not be the typical millionaire-maker stock, Nvidia still has the potential to provide value to investors over the long term.
Source: https://www.fool.com/investing/2025/06/08/is-nvidia-still-a-millionaire-maker-stock