The $5 Trillion Question: Is Nvidia Stock Still a Buy?

The Setup

Nvidia’s market cap journey reads like a crypto bull run: $1T in 2023 → $3T in 2024 → $5T in 2025. The AI chip gorilla just keeps winning. But here’s the thing — valuation math doesn’t care about hype.

Why the Bull Case Still Works

Revenue growth is legit. Nvidia pulled in $165B last year, a 1,000% surge over five years. OpenAI alone committed $100B to infrastructure spend (with Nvidia as the preferred vendor), and Amazon’s dropping $550B on data center capex next year — up 24% from 2025.

If these megacorps keep the spending spree rolling, Nvidia could hit $200B+ in revenue by 2026. That’s the base case everyone’s pricing in.

The Margin Trap Nobody’s Talking About

Here’s where it gets spicy: Revenue growth ≠ Profit growth.

Gross margin dropped to 70% (was higher in 2023-24). Why? Taiwan Semiconductor’s Arizona fabs cost more than Taiwan fabs, and those costs are flowing down to Nvidia’s supply chain.

Operating margin is at 58% — trending down. If Nvidia can’t pass these costs to customers, margins will keep compressing to the historical 30-40% range.

The Real Threat: Custom Silicon

Amazon built Trainium chips. Google’s ramping Tensor Processing Units. Apple’s not waiting either. When your customers become competitors, you lose pricing power. Nvidia’s premium chip prices could face downward pressure as competition heats up.

The Valuation Problem

Nvida trades at a P/E of 54.5x — most expensive megacap tech (except Tesla). That multiple assumes earnings will grow in lockstep with revenue. But if margins compress from 58% to 40%, earnings growth gets crushed while revenue is still expanding.

The stock is pricing in perfection. Before Nov. 19 earnings, this is a risky bet.

The Bottom Line

Yes, Nvidia will keep growing. No, that doesn’t mean the stock keeps ripping at these prices. Investors should wait for a better entry point or look at other mega-cap tech plays with healthier margins.