Nvidia (NVDA) is at the center of the artificial intelligence (AI) revolution, and hedge funds are sitting up and taking notice. Soros Fund Management bought Nvidia for its portfolio by more than 1,600% in the second quarter, while David Tepper's Appaloosa Management increased its holding by nearly five times. The aggressive positioning is a reflection of Nvidia's leadership in AI chips and infrastructure, even as Chinese regulatory risks impact near-term performance.

The buzz is that Nvidia shares have soared more than 26% in the year so far for 2025, significantly surpassing the S&P 500’s (SPY) around 9% increase for the same period. With the world's accelerated adoption of AI, investors are still considering Nvidia the essential hardware pillar of the phenomenon. The question is whether the price of the stock nowadays correctly reflects both the future expansion prospects and the rising challenges for the business.

About Nvidia Stock

Nvidia is the Santa Clara, California-based leader in designing graphics processing units (GPUs) and accelerators for artificial intelligence (AI). With a $4.3 trillion market capitalization, Nvidia has evolved from a gaming chipmaker to the leading supplier of the infrastructure for artificial intelligence across data centers, autonomous vehicles, and robots.

Nvidia's shares have gone up from a 52-week low of $86.62 to as high as $184.48, closing at about $175.40 on Aug. 20. That's a 35.5% gain over the period in the past twelve months, comfortably beating the S&P 500 Index. Although the stock has gone down some 3% in the past week, the chart remains bullish, supported by buying interest from major hedge funds.

On valuation, Nvidia trades at lofty levels with a forward price-earnings (P/E) ratio of 44x, well above semiconductor industry averages. Its enterprise value-to-sales (V/S) multiple reflects investor expectations for sustained AI-led growth. While some argue the stock is priced for perfection, bulls point to Nvidia’s unique positioning in AI infrastructure, which supports premium valuations. 

Unlike dividend-heavy peers, Nvidia offers only a token yield of 0.03%, keeping its appeal squarely tied to growth rather than income.

Nvidia Wins on Earnings Despite Export Hurdles

Nvidia in Q1 of fiscal 2026 generated revenue of $44.1 billion, up by 69% from the preceding-year period, and $0.81 in non-GAAP EPS. Not including a $4.5 billion expense related to U.S. control of exporting its H20 chips to China, EPS would have exceeded consensus levels at $0.96 or better. Adjusted for the charge, gross margins were a solid 71.3%.

Looking ahead, Q2 revenue guidance in the $44.1 billion to $45.9 billion range is comfortably within Wall Street’s $45.8 billion consensus. Q2 GAAP net income is forecast by analysts at $23.2 billion, good for a 39.6% gain over the prior-year period. Margins are seen by management as regaining the mid-70% range, confirming the strength of its business model based on artificial intelligence.

Aside from numbers, Nvidia showcased its Blackwell NVL72 AI supercomputer and newly launched robotics projects, including Isaac, the initial humanoid robot foundation model. These releases widen Nvidia's scope, aside from data centers, and place it for expansion in up-and-coming verticals, including autonomous vehicles and industrial automation.

What Analysts Expect for NVDA Stock?

Wall Street remains bullish on NVDA stock. It is followed by 46 analysts with a “Strong Buy” rating consensus and an average price target of $191.77 suggesting a potential gain of 9.6% from here. The highest target on the street at $250 suggests much more appreciation potential, while the lowest target at $100 signals continued discussion of valuation risk.