Top 4 Reasons Why Nvidia Stock Price Will Rebound Soon

Key Insights

• NVIDIA stock price is moving sideways this year.
• The upcoming Trump visit to China may be a key catalyst.
• Data shows the company is highly undervalued.

NVIDIA stock price has been flat this year. It has ignored most catalysts, including its recent quarterly results. It has dropped slightly from the all-time high of $213 to the current $177. Still, there are reasons why the stock may rebound in the coming weeks.

Donald Trump to Visit China This Month

One potential reason why the Nvidia stock price may rebound is that President Donald Trump will visit Beijing later this month for a meeting with Xi Jinping and other leaders.

Historically, Trump has been accompanied by top American executives, especially those with business interests in the visiting countries.

While it has not been confirmed, Jensen Huang, Nvidia’s CEO, is likely to be one of these executives.

If this happens, he will likely advocate shipping NVIDIA’s chips to China, the biggest market for these products.

China has already allowed local companies like Alibaba, Tencent, and ByteDance to buy these chips, with the only challenge being the Commerce Department, which has continued to evaluate potential customers.

A report released last week showed that the department is considering limiting the number of chips each company can buy to 70,000.

A potential deal between Trump and Xi Jinping will be bullish for NVIDIA’s stock price, as China is a major semiconductor market.

NVIDIA is a Growth Company With a Value Stock Valuation

Meanwhile, there are signs that the company has become a bargain despite its strong fundamentals. It is valued as a value stock rather than the growth machine it is today.

A closer look shows that the company is being valued at 21x expected earnings for the year. This valuation aligns with the technology sector and the S&P 500 Index.

The valuation multiple is much lower than the five-year average of 45. This means that its valuation metric is much lower, even as the revenue and profitability growth are accelerating.

Other valuation metrics indicate that the company is now cheaper than other top companies. For example, the forward enterprise value (EV) to EBITDA multiple has dropped to 17, well below the five-year average of 43.

In most cases, these valuation multiples often drop when a company is going through challenges. For example, Adobe’s forward PE ratio has dropped from 30 in 2024 to 11 today as its business has faced the risk of disruption by AI tools.

NVIDIA’s Growth is Accelerating

In NVIDIA’s case, its revenue and profitability are accelerating despite rising competition from companies like AMD and Intel.

Wall Street analysts are optimistic that the company’s revenue growth will continue this year. Yahoo Finance data shows that the company’s revenue will rise by 70% this year to $387 billion.

This revenue growth will come from top hyperscalers like Amazon and Google, as well as neocloud companies like IREN and CoreWeave. If it achieves this revenue growth, it will be one of the fastest-growing American companies.

The same is true of its profitability, as analysts expect its earnings per share to jump to $8.25 this year from $4.77 last year, a 72% surge.

NVIDIA Stock Technicals Suggest More Gains are Possible

The long-term chart shows that the NVIDIA share price has been in a bull run for years. This rally has not been in a straight line,; it often pulls back and enters corrections.

Historically, these pullbacks have become good entry points for investors with a long-term horizon. For example, the stock dropped from $152 early last year to a low of $87, then resumed its uptrend.

The stock sits above the 50-week Exponential Moving Average and the ascending trendline that links the lowest levels since September last year.

Therefore, the stock will likely rebound in the coming weeks or months and cross the all-time high. If this happens, the next psychological target will be at $250.

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