Nvidia (NASDAQ: NVDA) stock has delivered blistering gains since early last year, but it's been a wild ride. After surging 828%, the artificial intelligence (AI) chipmaker shed 27% of its value, though it's now down about 20%.
Expectations were high going into Nvidia's second-quarter financial report. While the results were better than expected, they weren't enough to support the recent run-up . One Wall Street analyst believes the decline represents a compelling opportunity.
Cantor Fitzgerald says Nvidia is a buy
In the wake of Nvidia's financial report, Cantor Fitzgerald analyst C.J. Muse reiterated his buy rating and $175 price target on Nvidia stock, which represents potential gains for investors of 62%, compared to Tuesday's closing price. Despite the stock's recent weakness, the analyst called Nvidia's results "solid."
Muse believes concerns about the delayed launch of Blackwell -- the company's next-generation AI architecture -- "appears to be a nothing burger ahead of one of the biggest and baddest product cycles in Nvidia's history." With no change to the AI tailwinds driving Nvidia's growth, Muse believes the current price is "still too cheap to ignore."
The analyst is clearly on top of his game. During the company's Q2 earnings call , CEO Jensen Huang said, "The demand for Blackwell is incredible." He believes "Blackwell is going to be a complete game changer for the industry" because it "provides three to five times more AI throughput in a power-limited data center" than its predecessor, Hopper. Management expects "several billion dollars" in Blackwell revenue in the fourth quarter before it runs riot next year.
Nvidia is guiding for third-quarter revenue growth of roughly 80% year over year after five consecutive quarters of triple-digit growth, but we knew growth would slow eventually. Generative AI is expected to add between $2.6 trillion and $4.4 trillion to the global economy over the coming decade, according to researchers at McKinsey & Company, and Nvidia is at the forefront of this paradigm shift.
Nvidia stock is currently selling for 38 times forward earnings. However, its strong track record of growth illustrates why it's worth every penny.
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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy .
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