Nvidia Stock Keeps Heading Lower. Is It Time to Buy?

Nvidia (NASDAQ: NVDA) shares fell on Monday as the artificial intelligence (AI) chip leader continues to show sensitivity to the broader market pullback.

Semiconductor stocks like Nvidia are known for being cyclical, so it's understandable that the stock would fall on the general stock market concerns, which include weakening consumer sentiment, stubborn inflation, intensifying tariffs, and other issues. The news today that seemed to drive the market down was President Trump's reaffirming of "Liberation Day" or a new round of reciprocal tariffs that are set to go into effect on Wednesday.

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As a result, Nvidia stock was down 2.1% as of 2:58 p.m. ET, after falling as much as 5.5% earlier in the session.

Image source: Getty Images.

Nvidia's momentum is shifting

Through 2023 and 2024, Nvidia could do little wrong. The company posted blowout growth as demand skyrocketed for its data center GPUs, driven by the advent of ChatGPT.

However, despite continued strong results, including a revenue increase of 78% in its most recent quarter, Nvidia is now in its most sustained drawdown since the AI era started. Despite an increasingly attractive multiple, the price action in Nvidia seems to indicate that investors are preparing for more of the pain in the macro-level economy and hedging their bets on a recession.

Is Nvidia a buy?

Nvidia shares could certainly fall further from here, but based on the company's growth momentum, leadership in AI, and competitive advantages, the business continues to look attractive, and the valuation is very reasonable at a trailing price-to-earnings ratio of 36.5 and a forward P/E of less than 25.

For long-term investors, buying Nvidia at the current price point, but patience is required as the stock is likely to be volatile as long as economic uncertainty reigns over the market.

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Jeremy Bowman has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.