MW Four reasons Nvidia now looks like a bargain stock

By Philip van Doorn

Also: winners and losers from Trump's tariffs, an investment opportunity amid DOGE fears and how the stock market affects consumers

There's a quote from Berkshire Hathaway CEO Warren Buffett that you've probably seen before, but it is good for investors to be reminded that they must expect periods of greater volatility in the stock market.

This is from Buffett's 1986 letter to Berkshire's shareholders, in which he wrote about "occasional outbreaks of those two super-contagious diseases, fear and greed." He said that he and his colleagues never tried to predict the timing or duration of either. Then he wrote: "Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." All of Buffett's annual letters are posted here.

Could this be one of those times for Nvidia Corp. $(NVDA)$? Here are four reasons the stock now appears to be a bargain for long-term investors who can remain committed:

-- 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.

How important is the stock market to the average consumer?

The stock market isn't the economy, but the market's movement appears to be more important for consumers than it has ever been. William Watts shared a set of fascinating research results from Oxford Economics that tie stock-market performance to consumer spending habits.

More from the Markets team:

-- These are the 10 fund-management firms that lost the most money in the past decade. You'll never guess No. 1.

-- Stocks are falling again. Why they might look safer after the April 2 tariff deadline.

-- Why baby boomers may hold the cards in any Trump plan to rescue stocks from the selloff

This could be an 'easy win' for Trump the cost cutter

Cutting (or gutting) federal agencies and programs causes great controversy, but there might be an exception, according to Brett Arends. He suggested that making changes to this federal program would lead to annual savings of $84 billion.

Related coverage:

-- RFK Jr.'s job cuts explained: Which federal health agencies will be affected, what they do and how it could impact you

-- Fed's Musalem worries that the inflation caused by Trump's tariffs won't be so 'transitory'

Fallout from the car tariffs

On Wednesday Trump announced 25% tariffs on imported cars - that is, automobiles whose final assembly isn't done in factories in the U.S. This is a more complicated subject than it might seem at first, because it is impossible to buy a car that is 100% made in the U.S., as Victor Reklaitis explained.

This particular tariff policy will have far-ranging effects. Here is a sampling of MarketWatch's coverage:

-- Trump's automobile tariffs are lighting a fire under these two stocks

-- GM and Ford will be hurt by tariffs, but here's why the stocks are still a buy

-- Should you buy a car now to avoid tariffs? That strategy has one big potential roadblock.

-- People could barely afford their cars even before Trump's tariffs. It's about to get worse.

Trump's coming reciprocal tariffs

Next week Trump is expected to announce a series of tariffs to match those of 10 to 15 countries that have similar trade barriers on imports from the U.S. Victor Reklaitis broke down the list of countries and industries that might be affected by the April 2 reciprocal tariffs, based on the information that has been made available so far. He also looked into four big hurdles for Trump's tariff plan.

Gordon Gottsegen: As Trump's tariff 'Liberation Day' nears, investors are loading up on options and these stocks

ETF Wrap: Investors in exchange-traded funds appear hungry for international stocks despite looming tariffs

Buying a competitor doesn't always work out well

Dollar Tree Inc. $(DLTR)$ paid $8.5 billion in 2015 to acquire Family Dollar, one of its main competitors. On Wednesday, Dollar Tree said it would sell Family Dollar for $1 billion. Dollar Tree's share price rose 3% on Wednesday and another 11% on Thursday. James Rogers reviewed Dollar Tree's quarterly results and explained the change in direction and why investors were so happy with it.

Other corporate news: CoreWeave prices IPO at a downsized $40 a share, raising $1.5 billion

An investment opportunity springing from a DOGE fear

Elon Musk is leading the push by the entity known as the Department of Government Efficiency to slash expenses at various federal agencies. This is one of the factors that has led to reduced valuations for small-cap and midcap biotechnology stocks in the U.S., according to Jefferies analyst Michael Yee.

In an interview with Michael Brush, Yee broke down several factors to show that biotech stock valuations might be close to bottoming out. Brush highlighted recent developments pointing to a rebound for the group.

Latest Social Security developments

Service cuts and staff reductions at Social Security might be especially worrisome to millions of people who worry about how difficult it might be to apply for benefits or correct any errors by the agency. Here is related coverage and advice:

-- Social Security says some applicants are exempt from in-person office visits

-- Social Security insider says 'we're all just waiting for the next shoe to drop'

-- Social Security Administration offers plan of 'transparency and accountability' after recent chaos

-- Social Security stopped a man's benefits because he was presumed dead. Could that happen to me?

Housing: We're getting closer to a buyer's market

Aarthi Swaminathan explained how weak demand for homes heading into the prime spring sales season could lead to this type of incentive from home builders.

The Moneyist

Quentin Fottrell - the Moneyist - helped MarketWatch readers with some painful questions about money and family this week:

-- I ate noodles during law school and graduated debt-free. Now my sister needs money. Is it OK to say no?

-- 'My daughter harasses me and wants to know where I go': She's after my money. How do I protect myself?

-- 'He gave me a week to get out': My son and I bought a house - now I'm homeless and living in a car. Can I sue him?

-- My mother, 81, is a hoarder and lives in squalor. What happens if her condo board finds out?

-- I look 10 years older due to stress, trauma and illness. Would I be financially reckless to spend $20K on cosmetic surgery?

Inflation reduction for opening day

Charles Passy has good news for baseball fans - especially those who wish to enjoy hot dogs or other treats at games without going broke.

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-Philip van Doorn

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March 28, 2025 13:07 ET (17:07 GMT)

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