Although you have most likely encountered this quotation from Berkshire Hathaway CEO Warren Buffett before, it reminds investors that they should be ready for times of more stock market volatility.
This is from Buffett’s 1986 letter to Berkshire’s owners, on “occasional outbreaks of those two super-contagious diseases, fear and greed.” He claimed that neither timing nor length of either were something he or his associates tried to forecast. Then he penned: “Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” We have all of Buffett’s yearly letters right here.
Is this among such occasions for Nvidia Corp. (NVDA)? For long-term investors who can remain committed, these four factors help to explain why the stock today seems to be a bargain:
- The stock was down 17% for 2025 through Thursday, while the S&P 500 SPX was down 2.9%. All investment returns in this article include reinvested dividends.
- Nvidia still has momentum. Through Thursday the stock was up 23.5% from a year earlier, while the S&P 500 was up 9.9%. And during that period Nvidia’s forward price-to-earnings ratio declined to 23.6 from 35.5, while the S&P 500’s weighted forward P/E declined to 20.6 from 21.3. These are prices divided by rolling consensus 12-month earnings-per-share estimates among analysts polled by FactSet. So the increases of earnings estimates outpaced share-price increases for Nvidia and the index, but the argument can be made that Nvidia is now a cheap stock. Why? Because from calendar 2024 through 2026, Nvidia is expected to increase its sales at a compound annual growth rate of 41.3%, with a projected EPS growth rate of 41.9%, based on consensus estimates among analysts polled by FactSet. For the S&P 500, the projected sales CAGR is 6.1%, while the projected EPS CAGR is 13.5%.
- Advanced Micro Devices Inc. AMD had appeared to be one of the best-positioned competitors to take market share from Nvidia, which dominates the market for graphics processing units being installed by data centers to support development of artificial-intelligence technology. But this hasn’t panned out – at least not yet. Emily Bary explained how the competitive landscape for GPUs might evolve for AMD, Nvidia and another competitor.
- The evolving set of trade disputes between the U.S. and China may be weighing on Nvidia’s shares. This sets up a possible catalyst for the stock, depending on a policy decision President Donald Trump needs to make by May 15, as Therese Poletti explained.
To the regular consumer, how significant is the stock market?
Although the stock market is not the economy, for consumers the movement of the market seems to be more crucial than it has ever been. William Watts presented a set of intriguing Oxford Economics research findings linking consumer behavior to stock-market success.
