Nvidia shares rose today (again), but are still 10% below their all-time high. Can the shares still be purchased?

Nvidia (NASDAQ: NVDA) he has been on an incredible rollercoaster journey in recent months. After plummeting over the summer and losing more than a quarter of its value, the stock has made an impressive comeback and is now approximately 10% off its all-time high (at the time of writing).

CEO Jensen Huang’s comments helped fuel gains today, as the company’s stock was up 3.1% by 2 p.m. EST.

Despite the volatility, investors should keep their eyes on the prize.

Taking a step back

Nvidia has become something of a battleground in recent months, and both sides have valid points. The latest management forecast assumes an 80% increase in sales in the current quarter. While this represents a slowdown in the triple-digit growth that made headlines last year, it is still impressive.

Bears also point to the company’s gross margin of 75.1% in the second quarter of fiscal 2025 (ended July 28), down from 78.4% in the first quarter. Considering it was a record-breaking performance, it’s best viewed in that context.

Management noted that gross margin declined sequentially due to product mix and inventory holdings of next-generation Blackwell AI processors, which are expected to begin shipping in the fourth quarter. Historically, new products had higher margins, which could result in higher gross profits. Moreover, in an interview yesterday, CEO Jensen Huang noted that demand for Blackwell processors is “crazy.”

Finally, bears point to Nvidia’s high valuation, and at 58x earnings, it’s easy to see what they mean. However, consensus analyst estimates call for Nvidia to generate earnings per share of $4.02 in fiscal 2026 (which starts in January). This equates to just under 30 times expected earnings next year, which is comparable to a price-to-earnings (P/E) ratio of 30 for S&P500.

We are still in the early stages of implementing generative artificial intelligence. According to Bloomberg Intelligence, some experts estimate that the market will be worth $1.3 trillion by 2032. As a company at the forefront of the AI revolution, Nvidia still has plenty of upside ahead. Therefore, the shares can still be purchased.

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Danny Vena has positions at Nvidia. The Motley Fool covers and recommends Nvidia. The Motley Fool has a disclosure policy.

Nvidia shares rose today (again), but are still 10% below their all-time high. Can the shares still be purchased? was originally published by The Motley Fool