Nvidia Corporation‘S (NASDAQ: NVDA) Shares fell 3.4% last week in response to third-quarter fiscal 2025 results, but I see this modest decline as an opportunity to add to my position. Although analysts expect the company’s revenue growth to slow from 111.9% in fiscal 2025 to 49.2% in fiscal 2026, I remain convinced of the fundamental story of this tech giant.
I’m especially excited about the opportunities that await us in the field of artificial intelligence (AI). Major cloud providers plan to invest $267 billion in AI infrastructure alone next year, an increase of 33.5% from current levels. This unprecedented expansion positions Nvidia, with its 80% market share in AI chips, at the center of what Amazon CEO Andy Jassy calls it a “once-in-a-lifetime” opportunity.
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Here’s a full breakdown of why I plan to continue buying shares of this AI titan despite its slowing growth trajectory.
Nvidia’s latest results demonstrate its dominance in AI computing. The company reported record data center revenue of $30.8 billion for the third quarter of fiscal 2025, up 112% year over year. This staggering growth reflects the insatiable demand from major cloud providers racing to build AI capabilities.
Microsoft is expected to spend $80 billion on total infrastructure by 2024 Alphabet and Amazon have earmarked $51 billion and $75 billion respectively for their capital investments, with AI infrastructure a key focus.
CEO Jensen Huang describes current demand for AI as “insane,” with the total addressable market for AI accelerators expected to grow more than 60% annually to reach $500 billion by 2028, according to CEO Jensen Huang. Advanced micro devices (AMD) CEO Lisa Su. This rapid market expansion is not just about current applications; the entire industry is preparing for the next wave of AI breakthroughs.
At 33.6 times forward earnings, Nvidia trades at a premium to the S&P500‘s 23.8 multiple, but remains fairly valued given its growth trajectory. After all, a company that generates more than 100% revenue year after year and has industry-leading profitability deserves to trade at a premium multiple.
Moreover, the company’s pricing power tells a compelling story. Gross margins reached a blistering 74.6% on a generally accepted accounting principles (GAAP) basis in the most recent quarter, demonstrating exceptional operational efficiency even as production scales up to meet rising demand. This pricing power comes from continuous technological innovation.
Evidence of this innovation can be found throughout Nvidia’s product line. The H200 chip, which delivers up to 2x faster inference performance and up to 50% improved total cost of ownership according to management, has seen significant revenue growth and is now being deployed by major cloud providers including AWS, CoreWeave and Microsoft Azure. Meanwhile, the next-generation Blackwell platform has entered full production, promising even greater performance improvements in the coming years.
While Nvidia’s growth numbers may be cooling off from their torrid pace, I remain convinced of the company’s long-term potential. After all, major cloud providers plan to accelerate AI investments in the coming years, and enterprise adoption has only just begun. According to CEO Jensen Huang, “$1 trillion worth of computer systems and data centers around the world are now being modernized for machine learning.”
Furthermore, the entire space is approaching a potential ‘Gutenberg moment’ with the possible arrival of artificial general intelligence (AGI) – AI systems capable of performing every intellectual task that humans can – within the next two to three years . Such a breakthrough would require enormous computing power, likely increasing demand for Nvidia’s specialized chips even more.
A normalizing growth rate might scare some investors, but I see a much bigger picture emerging. With its dominant market position, growing technological lead, and massive AI infrastructure buildout that is still in its early stages, I am using this latest dip to aggressively expand my position in this AI juggernaut.
Consider the following before buying shares in Nvidia:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. George Budwell has positions at Microsoft and Nvidia. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
Nvidia’s Growth May Be Chilling, But Here’s Why I’m Still Buying Originally published by The Motley Fool
