To The Moon

As of April 5, 2025, NVIDIA ( $NVIDIA(NVDA)$ ) is at a crossroads. With its stock price dipping near $90, investors face a pivotal decision: Should you add to your position if it falls below $100, or is it time to liquidate and walk away? The semiconductor industry’s cyclical nature—coupled with NVIDIA’s unique position in AI and data centers—makes this a complex call. Let’s dissect the current semiconductor cycle, NVIDIA’s financial outlook, the Blackwell wildcard, and the risks ahead to provide a clear, actionable perspective.

Where Are We in the Semiconductor Cycle?

The semiconductor cycle, averaging 3-5 years, has seen four complete turns since 2008. The latest trough hit in Q1 2023, marked by low demand and excess inventory. Since then, recovery has been swift, fueled by AI-driven demand. NVIDIA’s fiscal 2025 revenue soared to $130.5 billion—a 114% year-over-year leap—suggesting the cycle is still in its growth phase. But has it peaked? Some argue the traditional cycle ended, disrupted by AI’s insatiable appetite for chips. Others see a potential downturn looming if supply outpaces demand.

Table: Semiconductor Cycle Snapshot (Current Cycle)

My view? The cycle hasn’t ended—it’s evolved. AI and data center growth have extended the recovery, potentially delaying the peak. NVIDIA’s $11 billion Q4 Blackwell haul reinforces this. However, classic cyclical risks (e.g., oversupply) linger on the horizon.

NVIDIA’s Financials: Opportunity or Warning Sign?

NVIDIA’s PE ratio sits lower than its historical norms, tempting value hunters. At $90, it’s a far cry from its highs, hinting at a bargain—if you ignore the fine print. The Blackwell rollout, while a revenue juggernaut, is crimping gross margins. Analysts peg margins in the low 70s now, with a rebound to the mid-70s by late fiscal 2025. Lower margins could nudge the PE ratio higher next year, diluting the “cheap” narrative.

NVIDIA’s Margin Trajectory

NVIDIA's Gross Margin from Q1 2023 through Q4 2025

This dip isn’t fatal—NVIDIA’s fundamentals are rock-solid. But it’s a speed bump that could shake short-term confidence.

Blackwell: Game-Changer or Margin Muncher?

Blackwell, NVIDIA’s latest AI powerhouse, is a double-edged sword. It’s driving massive revenue, but its complex production is eating into profitability. The trade-off? Short-term pain for long-term gain. As manufacturing scales, costs should ease, and margins should recover. If NVIDIA pulls this off, Blackwell cements its AI dominance. If not, expect more volatility.

Risks You Can’t Ignore

• Cycle Fatigue: If AI demand softens or supply balloons, the cycle could turn sooner than expected.

• Geopolitical Heat: Trade tariffs and tensions (e.g., U.S.-China) have already dented NVIDIA’s stock.

• Competition: Rivals are circling, though none match NVIDIA’s AI moat yet.

These aren’t dealbreakers, but they’re loud enough to keep you up at night.

Add at $90 or Liquidate? Here’s the Playbook

If NVIDIA slips below $100, your move depends on your horizon and risk appetite. Let’s weigh it:

Add to Your Position

• Why: NVIDIA’s AI leadership is unmatched, and $90 could be a steal if margins rebound and demand holds. Analysts see upside—some peg $185 as a target, a 105% jump from $90.

• Who It’s For: Long-term bulls who can ride out bumps.

Liquidate Now

• Why: Margin pressure, cycle uncertainty, and external risks could drag the stock lower. Cashing out at $90 locks in gains (or cuts losses) before a potential storm.

• Who It’s For: Short-term traders or the risk-averse.

Middle Ground: Hedge Your Bets

• Buy half your intended stake at $90. If it dips further (say, $80), add more. If it rallies, you’re in early. This balances opportunity and caution.

My Take

I lean toward adding at $90—cautiously. The semiconductor cycle isn’t dead; it’s morphed into an AI-fueled beast, and NVIDIA’s riding the wave. Yes, Blackwell’s margin hit stings, and risks loom, but the long-term story outweighs the noise. Liquidating feels premature unless you’re convinced the cycle’s about to crash (I’m not). A phased entry minimizes downside while keeping you in the game.

Bottom Line: NVIDIA at $90 isn’t a screaming buy or a panic sell—it’s a calculated bet on a titan navigating a tricky cycle. Pick your spot, size wisely, and keep an eye on the tape.

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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