Down 20% YTD, is it time to buy NVIDIA stock?

Key points

• NVIDIA stock fell another 5% on Monday.

• The AI stock is down some 20% YTD.

• Is NVIDIA a buy?

The AI stock was down another 5% on Monday.

NVIDIA (NASDAQ:NVDA) stock has been plummeting in 2025, a victim of its own success as its valuation skyrocketed over the past two years to unsustainable levels.

The AI stock has seen minor corrections over the past couple of years during this remarkable run, but none have lasted as long or cut as deep as this one. Year-to-date, NVIDIA has dropped about 20% to roughly $106 per share and since early November it is down around 26%.

That slide continued on Monday, as NVIDIA stock was off another 5% in another bloodbath for the markets. The Nasdaq was down a whopping 760 points, or 4%, on Monday as of 2:00 p.m. ET, while the Dow Jones fell 788 points, or 1.8%. The S&P 500 dropped 154 points, or 2.7%, while the Russell 2000 plummeted 49 points, or 2.4%.

Shares were driven down by a range of issues that have plagued the markets in recent weeks — rising inflation, tariffs and trade wars, sinking consumer confidence, and the threat of recession. In an interview Sunday, President Donald Trump did not say no when asked if he thinks there will be a recession, so that may have also been a contributing factor.

Also, Canada’s new Prime Minister Mark Carney said Canada would not be lifting or pausing reciprocal tariffs on the U.S. until some respect is shown to the country.

What’s going on?

As for NVIDIA, there really was no immediate catalyst for the drop, other than one analyst, Ben Reitzes from Melius Research lowering his two-year price target for NVIDIA to $170 per share from $195 per share.

That would still be a 65% increase over two years, which is a solid gain, but nothing like the triple-digit returns NVIDIA has seen annually over each of the past two years.

AI stocks, including NVIDIA, have been under pressure from “potential tariffs, regulations and bans (and) innovations that make computing cheaper,” Reitzes wrote in a client note, reported Investors’ Business Daily. “As a result, AI semis and hardware stocks are trading like no one knows what’s going on — including shares of Nvidia.”

But it really comes back to NVIDIA and AI stocks being ridiculously oversold and overvalued over the past two years. The high P/E ratio the stock was carrying was bound to settle back to a more historically normal range.

NVIDIA is now getting down to a much more preferable valuation range with a P/E of 38, and a forward P/E of 25. That’s down from 81 a year ago and 48 at the end of January.

Is NVIDIA a buy?

NVIDIA’s trailing P/E ratio hasn’t been this low since before the pandemic. While 38 is still high for most stocks, for NVIDIA, because of its ridiculous earnings power, it’s relatively good. Reitzes sees it as a buy.

“At this point, we believe Nvidia and several others in the AI semis and hardware space are on sale and good buys right now,” Reitzes added, reported IBD. “It doesn’t mean that the stocks will work in the very near-term since there may not be visibility on key issues regarding regulations and geopolitics including tariffs.”

It certainly looks like it is in or near the buy zone right now. However, the stock could go lower, especially if inflation news is bad this week or the economy turns south. But Oracle reports earnings tonight and that could be a potential catalyst for NVIDIA, as the companies are working together on the Stargate AI infrastructure project.

Expect more volatility from NVIDIA, but the stock is looking more attractive from a valuation standpoint.