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:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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)!

Should you invest £1,000 in Rio Tinto right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rio Tinto made the list?

See the 6 stocks

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?

Created with Highcharts 11.4.3Nvidia PriceZoom1M3M6MYTD1Y5Y10YALL23 Jan 202023 Jan 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '2520212021202220222023202320242024www.fool.co.uk

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.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Rio Tinto right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rio Tinto made the list?

See the 6 stocks

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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »