I asked ChatGPT if I should buy Nvidia stock in 2025 and it said this…

This Fool sold Nvidia stock in 2024 but is now wondering whether to bring the leader in artificial intelligence computing back into his portfolio.

| More on:
artificial intelligence investing algorithms

Image source: Getty Images.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Nvidia (NASDAQ: NVDA) just became the world’s most valuable company again after a quick burst from its stock price saw it leapfrog Apple.

With its market cap now at a staggering $3.6trn, it’s valued more highly than the entire London Stock Exchange!

But a sad anniversary is approaching in March. That will mark a year since I sold my shares in Nvidia. Since then, the stock is up 60% (cue Homer Simpson’s famous catchphrase)!

To be fair, I assumed I was probably giving up further gains in the near term, hopefully to avoid a massive pullback in the medium term. However, I failed to factor in the likelihood of a Trump return, tax cuts, deregulation, and the rest of it. In short, the unrestrained unleashing of animal spirits on Wall Street.

So infectious have these spirits been that even Europe is interested in harnessing artificial intelligence (AI) rather than merely regulating it. The Labour government said it wants to “mainline AI into the veins” of the UK, though some of the use cases (like spotting potholes) are admittedly less heart-stopping.

Anyway, AI chip king Nvidia’s growth trajectory seems unstoppable once again. So, should I re-buy the stock in 2025?

Calling in the bot

Given that I seemingly sold Nvidia far too early, my human brain is clearly flawed and fallible. So I asked ChatGPT’s silicon AI brain for help.

It informed me that Nvidia’s data centre segment is growing rapidly due to increased cloud computing and AI adoption. The bot assured me that the “ongoing AI revolution is in its early stages“.

However, it cautioned that high interest rates, inflation, and a potential recession in 2025 could hurt tech stocks. I’d go along with the first couple of risks, though the probability of a recession seems low. Indeed, Torsten Sløk, the chief economist at Apollo Global Management, recently said he thought that the probability of a US recession this year is now 0%.

ChatGPT mentioned that the stock is often highly valued. That’s true, as the trailing price-to-earnings (P/E) ratio is 58.

On the other hand, it assured me that Nvidia has consistently delivered strong revenue and earnings growth. That’s less true because in late 2022 (just before ChatGPT was released and when I last bought shares) the company’s Q3 2023 revenue declined 17% year on year. Earnings fell 72%!

This highlights the cyclical nature of the semiconductor industry (which the AI assistant did highlight, to be fair).

Now, I had to push ChatGPT to get off the fence and give me an ‘opinion’. It did, sort of, saying that if I “believe in the long-term secular growth trends in AI, machine learning, and cloud computing, Nvidia could be a great addition to [my] portfolio in 2025.”

None of this has helped me much.

To buy?

Tech companies are apparently increasingly relying on synthetic data (i.e. made up by algorithms) to train AI after exhausting all human-generated data. But the challenges to overcome now include more hallucinations and even model collapses. 

Will large language models ever prove profitable and justify the mind-boggling expenditure? Or are companies massively overspending? I’m still left with the nagging feeling that Nvidia’s sales, pricing power, and ultimately fat margins are unsustainable.

Due to these doubts, I’m not going to reinvest.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

Time to buy Nvidia shares before fresh all-time highs?

Nvidia shares began 2025 at an all-time high before a big drop in the last week or two. Our writer…

Read more »

Investing Articles

A top FTSE 100 share to consider for a Stocks and Shares ISA starter portfolio!

While not without risk, a lump sum in this FTSE 100 trust could prove a great way for Stocks and…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

I asked ChatGPT to name the best 5 UK shares to build wealth over 50 – and here they are!

Harvey Jones is looking to build a balanced portfolio of UK shares to fund his final years, and asked ChatGPT…

Read more »

Investing Articles

£10k invested in Scottish Mortgage shares after the DeepSeek crash is now worth…

Harvey Jones thought his Scottish Mortgage shares were heading for a bumpy ride when DeepSeek emerged last month. Then he…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

1 ex-penny stock up nearly 400% in my Stocks and Shares ISA! 

This writer is starting to take notice of a small-cap stock that is 'up' significantly in his ISA portfolio over…

Read more »

Investing Articles

The FTSE 100 index hits new highs! But will Legal & General shares outperform it in 2025?

Legal & General's share price has rocketed almost 8% so far in 2025. Can it continue to outstrip the surging…

Read more »

Investing Articles

Up another 8% in a week! So what’s stopping me from buying IAG shares? 

Harvey Jones is desperate to add high-flying IAG shares to his portfolio before they climb even higher but there's a…

Read more »

Happy couple showing relief at news
Investing Articles

The Bank of England’s slashed its growth forecast but the FTSE 100 doesn’t seem to care!

On the day the UK’s central bank halved its forecast for growth in 2025, the FTSE 100 reached a record…

Read more »