In a year where artificial intelligence (AI) continues dominating headlines and enterprise spending, one might expect the sector’s undisputed leader to be posting spectacular gains. Instead, Nvidia (NVDA 1.73%) has delivered a surprisingly modest 2.3% return year to date as of this writing, barely outpacing the S&P 500‘s rather modest 0.32% advance in 2025. For a company that became synonymous with the AI boom, this restrained performance raises an intriguing question for growth investors.
The disconnect becomes even more puzzling when examining Nvidia’s recent financial performance. The chipmaker just reported first-quarter fiscal 2026 results that would make most technology executives envious, with revenue surging 69% year over year to $44.1 billion and guidance pointing toward continued robust growth. Yet the market’s tepid response suggests either excessive caution or a compelling buying opportunity.
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At 21.8 times projected 2028 earnings, Nvidia trades at a reasonable multiple for a company delivering 69% revenue growth and dominating the AI infrastructure market. For investors willing to look past near-term headwinds, the combination of muted stock performance and accelerating fundamentals could represent one of 2025’s most compelling value propositions in the technology sector.
Chinese export concerns are overblown
The primary factor weighing on Nvidia’s stock performance has been concerns about U.S. export controls limiting the company’s access to the Chinese market. The restrictions, which took effect on April 9, 2025, resulted in a $4.5 billion charge in the first quarter and will cost the company an estimated $2.5 billion in first-quarter revenue and $8 billion in second-quarter revenue from foregone H20 chip sales due to the export restrictions.
While these numbers appear substantial, they demonstrate Nvidia’s resilience rather than vulnerability. Despite being blocked from selling H20 products specifically designed for China’s AI market, the company still managed to deliver $44.1 billion in quarterly revenue and guide toward $45 billion for the second quarter. This represents 50% year-over-year growth even with the China headwinds fully incorporated.
More importantly, Nvidia’s data center revenue of $39.1 billion grew 73% year over year, with nearly 70% coming from the company’s latest Blackwell products. This suggests that demand from other global markets more than compensates for the Chinese restrictions. The company’s ability to grow despite losing access to the world’s second-largest economy strengthens the investment thesis by proving the breadth and depth of AI adoption worldwide.
Blackwell momentum accelerates growth trajectory
The standout performer in Nvidia’s latest results was the rapid adoption of its Blackwell architecture across both data center and gaming applications. Data center customers are embracing Blackwell-based products faster than anticipated, contributing to the majority of Nvidia’s $39.1 billion in segment revenue.
Gaming revenue provided another positive surprise, jumping 48% sequentially and 42% year over year as new Blackwell-based gaming products gained traction. This diversification beyond pure AI applications demonstrates Nvidia’s ability to monetize its advanced chip architectures across multiple high-growth segments, reducing dependence on any single market vertical.
The Blackwell success extends beyond just hardware sales. Nvidia’s expansion into networking, software, and services creates additional revenue streams while increasing customer switching costs. The company’s Compute Unified Device Architecture (CUDA) software platform remains the industry standard for AI development, creating a moat that competitors struggle to breach.
As enterprises move from AI experimentation to production deployment, this comprehensive ecosystem approach positions Nvidia to capture expanding wallet share from existing customers.
Nvidia stock still offers value
At 21.8 times projected 2028 earnings, Nvidia isn’t cheap by traditional metrics, but it’s not expensive relative to its growth trajectory, dominance in AI infrastructure, and unmatched software ecosystem. The company’s economic moat, built around its industry-leading GPUs and the ubiquitous CUDA platform, continues to repel challengers, even as AMD and hyperscalers attempt alternatives.
As AI enters a new phase defined by autonomous agents, physical-world integration, and multimodal models, Nvidia remains the clear platform leader. No rival is meaningfully close to disrupting that position. For long-term investors, the current valuation may still prove to be a bargain in hindsight.
George Budwell has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
