Nvidia’s stock is navigating a complex landscape as the new year unfolds, with Wall Street showing a degree of skepticism that seems to overlook a series of encouraging developments. These recent events bolster confidence in the company’s trajectory and offer valuable insights for both existing shareholders and potential new investors.
A significant development emerged early this week when reports indicated that China will indeed permit the importation of Nvidia’s H200 artificial intelligence chips. In a move to mitigate the ongoing trade uncertainties between the United States and China, Nvidia has reportedly adjusted its payment terms for Chinese customers. These adjustments include demands for upfront payments, a prohibition on order cancellations, and restrictions on system configuration changes post-order placement.
Despite this news, Nvidia’s shares experienced a dip of over 2.5% during Thursday’s trading session. While some attribute this decline to the stock’s prior rally of more than 10% from its mid-December lows, it’s worth examining the broader implications. The U.S. had previously imposed export restrictions on advanced AI chips, citing national security concerns related to China’s potential military applications of cutting-edge AI hardware. However, with the recent unveiling of the Vera Rubin platform, which is now two generations ahead of what American companies have access to, the H200 chip, while still powerful, represents a less advanced offering.
This nuance has sparked debate among industry observers. Some express concerns about providing China with substantial raw compute power, even if it’s not the absolute latest technology. The argument centers on the idea that the sheer volume of aggregate compute capability, rather than just the most advanced components, could prove strategically significant in the long run.
While the long-term national security implications of allowing more advanced chips into China remain to be seen, this development is poised to trigger upward revisions in Nvidia’s earnings estimates. This is primarily because analysts will now need to incorporate sales to China into their financial forecasts, a market that the company’s management has historically excluded from its guidance.
Further bolstering the bullish outlook was Nvidia CEO Jensen Huang’s address at the Consumer Electronics Show (CES) earlier this week. During his presentation, Huang confirmed that the Vera Rubin platform is in full production and highlighted numerous other positive aspects of the company’s business, including strategic partnerships and a strong emphasis on its role in autonomous vehicles, robotics, and what he termed “physical AI.” He also projected that advancements in AI will necessitate the replacement of approximately $10 trillion worth of traditional computing infrastructure globally.
Adding to this positive sentiment, Nvidia’s Chief Financial Officer, Colette Kress, stated during a fireside chat at CES that the company’s previously announced sales guidance of $500 billion for calendar years 2025 and 2026 has “definitely gotten larger.” Kress elaborated that Nvidia is experiencing strong demand for the Vera Rubin platform and is increasingly focused on forecasting the full-year volume requirements. This indicates a robust understanding of future demand and a strong position in the market.
For investors in Nvidia, these developments suggest that despite its substantial market capitalization, the stock still has significant growth potential. The broader market’s appreciation for advanced AI truly accelerated following the launch of ChatGPT in 2022. OpenAI, the creator of ChatGPT and a privately held entity, has seen its valuation soar to an estimated $850 billion, underscoring the explosive growth in generative AI. Nvidia’s role was pivotal to ChatGPT’s success, as its high-performance chips are essential for training and running such large language models.
Beyond chatbots, Nvidia is also positioning itself at the forefront of “physical AI.” This concept envisions AI that understands and operates within the laws of physics, enabling realistic simulations in virtual environments and powering AI for real-world applications. This includes applications like optimizing the operation of autonomous vehicles and robots, as well as enhancing manufacturing processes through digital twins for testing and development before physical construction.
Considering the planned rollout of the Vera Rubin platform in the latter half of the year and the renewed access to the Chinese market, the pertinent question for investors is whether now is the opportune moment to invest in Nvidia.
For those who already hold Nvidia stock, a measured approach may be advisable. While further upside is anticipated, there isn’t an immediate, compelling catalyst that suggests an imminent, significant upward breakout beyond the upcoming earnings release, scheduled for late afternoon on February 25th. Patience may be warranted to observe the market’s reaction to these near-term events.
However, for investors looking to initiate a position, the current valuation presents an attractive entry point. At approximately $185 per share, Nvidia is trading at a forward earnings multiple of less than 25 times, even before factoring in potential upward revisions stemming from the H200 chip authorization for China. This represents an 11-turn discount to its 5-year average forward valuation and places it near the lower end of its decade-long trading range.
This valuation becomes even more compelling when considering that analysts project earnings to grow at a compound annual growth rate (CAGR) of 32% over the next three years. This translates to a growth-adjusted PEG ratio of less than one, a metric generally considered highly attractive, indicating that the stock’s price is justified by its earnings growth prospects.
From a technical standpoint, the stock is also exhibiting an interesting pattern. Nvidia has been consolidating for over five months, and in the final week of 2025, it managed to trade back above its 50-day moving average. While consolidation periods can sometimes precede pullbacks, the confluence of positive fundamental factors suggests that the next significant price movement is likely to be to the upside. In this scenario, a potential target would be the previous all-time high around $212, representing an upside of nearly 15% from current levels. Should the stock experience a decline, the $167 level, marking the bottom of the five-month consolidation range, could serve as a support zone for new or additional investments.
In summary, for current Nvidia shareholders, there appears to be no immediate rush to increase exposure. Monitoring the company’s fiscal 2026 fourth-quarter earnings report and subsequent market reactions would be a prudent strategy. For those considering an entry, the current valuation offers a compelling opportunity to establish a position, mitigating the risk of missing out on potential gains while leaving room to add to the investment should the stock experience a pullback. A move below $170 would likely signal increased buying interest, consistent with price action observed over the past several months.
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