Nvidia (NASDAQ:NVDA) dropped nearly 4% on July 29, its third sharp pullback in a week, and now trades well off its 52 week high. That sounds bad, but the sell off has pushed Nvidia’s valuation to its lowest since 2019, even as the company posted a record quarter. The gap between a cheaper stock and a business still growing fast is what makes Nvidia worth a close look right now.
A Business Still Firing on All Cylinders
Nvidia’s most recent quarter (FQ1 2027) delivered $81.6 billion in revenue, a record and an 85% jump from a year earlier. The company already has roughly $1 trillion in confirmed orders for its Blackwell and Vera Rubin chips through 2027, and it expects hyperscaler AI spending to keep climbing toward $3 trillion to $4 trillion a year by decade’s end.
Nvidia is also branching out. Its new Vera server CPU targets a $200 billion market, with $20 billion in Vera revenue expected this fiscal year alone despite only recently shipping as a standalone product. On the inference side, its deal with Groq in late 2025 added language processing units built for the decoding stage of AI inference, broadening Nvidia beyond training chips.
How Nvidia Stacks Up Against AMD
Advanced Micro Devices (NASDAQ:AMD) competes directly with Nvidia for the same hyperscaler buildout in both GPUs and data center CPUs. Nvidia trades at roughly 22 times forward earnings versus about 67 times for AMD, making it by far the cheaper of the two assuming that NVDA’s earnings are sustainable in the long-term. Hedge funds have been adding to both: Nvidia was held by 275 funds in the first quarter of 2026, up from 264, while AMD was held by 134, up from 132. Short sellers are more skeptical of AMD, with 2.45% of its float sold short against 1.39% for Nvidia.
Where the Bull Case Gets Shaky
The most persistent worry is Nvidia’s own customers. Hyperscalers are building custom AI chips in house to cut their reliance on Nvidia’s GPUs, a long-term risk even while today’s demand stays strong. Wall Street already expects a slowdown, with consensus estimates calling for 219% cumulative revenue growth from fiscal 2026 through fiscal 2029, well below the 700% Nvidia posted over the prior three years.
The bigger flashpoint this month is financing. Nvidia is reportedly in talks to guarantee as much as $250 billion in data center lease payments so OpenAI can use a SoftBank facility, on top of up to $350 billion in GPU purchase financing for OpenAI. Combined with a new arrangement worth more than $500 billion with SK Group, the deals have revived worries about circular financing, in which a chipmaker helps fund the very companies buying its products. Nvidia shares fell nearly 5% on the initial reports.
Nvidia reports earnings on August 26, and that report should settle plenty. Accelerating hyperscaler spending with no sign of the custom chip shift denting demand would support the case that the sell off created an opening. Any softening in orders, or fresh detail on the OpenAI financing arrangement, would give skeptics more to work with. For now, Nvidia sits at its cheapest valuation in years, attached to a business still growing faster than nearly anything else in the market.
While we acknowledge the risk and potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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