Elon Musk Is Still a ‘Big Fan’ of Jensen Huang and Plans to Continue Buying Nvidia Chips. Does That Make NVDA Stock a Buy on the Dip?

Tech stocks have been on the rise lately, especially the AI-chip leaders. Nvidia’s (NVDA) stock is close to 2023-2025 as everyone chases AI for productivity. This year has been a little choppier. AI names have retreated from last fall’s highs, as investors worry about standardization and competition. However, the need is not abating. The AI ​​market could explode to $5.26 trillion by 2035, rising sharply from $274 billion by 2023, according to the estimate.

Nvidia has been in the headlines for many reasons, but this time it’s a little different. Yesterday, Elon Musk wrote in X that he is a “big fan” of Nvidia and CEO Jensen Huang, adding that SpaceX and Tesla (TSLA) will continue to buy Nvidia chips at a high rate. That praise, from one of Silicon Valley’s top customers, focused attention on Nvidia’s leadership in AI semiconductors. It begs the question: with Musk as a fan and big orders coming, is NVDA stock too attractive to ignore?

Nvidia is the leader in AI because it dominates the most important layer, chips, with a market share of about 90%, giving it a huge lead over competitors such as AMD ( AMD ) and Intel ( INTC ). With the AI ​​chip market predicted to grow from $500 billion to $1 trillion by 2030, Nvidia is in the best position to capture that growth. And it extends beyond data centers into “virtual AI,” powering robots, drones, and autonomous systems. In addition, Nvidia is entering software, aiming to control the entire AI ecosystem, which strengthens its long-term profitability.

After having a strong year, Nvidia stock is down nearly 6% year-to-date (YTD) in 2026. This slight decline comes despite a whopping 48% gain over the past year. The muted start to the year isn’t linked to the company’s weaknesses or fundamentals; it’s just because of the broader tech sector’s pullback, as the company delivered another quarter of jaw-dropping AI-driven growth.

From a valuation perspective, I see it as reasonable given the company’s current growth. The PEG ratio remains at 0.55, well below the industry average of 0.66, which means you’re paying less per unit of earnings growth. On the other hand, the forward P/E is 21.9x, right in line with the industry median and offers a 50% discount compared to its historical average. Furthermore, with a 55.6% profit margin and 101.5% return on equity, I believe this is a high quality business at a fair price.

On March 19, Elon Musk wrote on Twitter that he is a “big fan” of Nvidia and Jensen Huang and confirmed that Tesla and SpaceX will continue to buy Nvidia AI chips in bulk. He emphasized that Tesla’s future AI chips will be “optimized” for their robots and self-driving cars, but for now, Nvidia remains the key. Wall Street interpreted this as a win-win: Musk’s praise is a big endorsement, and the news confirmed that the two top AI customers in the world (Tesla and SpaceX) are not abandoning Nvidia anytime soon.

The market response, however, was modest. Nvidia shares dipped slightly following the announcement, as the technology sector came under pressure. Some analysts noted that Musk’s comments were a confirmation of existing plans Tesla already has as a customer rather than a surprising new development. Still, for investors who feared Tesla might shy away from foreign chips, Musk’s words were reassuring. The broader impact is that it helps alleviate concerns about losing large AI contracts. Actually, Musk’s shakeup is possible strengthened confidence in Nvidia’s business, even if it didn’t cause a big rally.

In Q4, Nvidia once again defied expectations and underscored why Musk is such a favorite. Revenue rose to $68.13 billion in Q4, up 73% year-over-year (YoY), setting yet another record. The real engine was the data center business, which brought in $62.3 billion, jumping 75% from last year and 22% from the previous quarter. That segment alone now accounts for more than 90% of Nvidia’s total sales.

Profit growth was equally impressive. Total revenue rose to $42.96 billion, up 94%, and earnings per share rose 82% to $1.62. The company also generated great cash flow, with $34.9 billion in free cash flow for the quarter. Nvidia ended up with about $62.6 billion in cash and investments, giving it greater flexibility to invest in future growth.

Looking ahead, management expects Q1 revenue to come in at around $78 billion, above expectations. Gross margins are expected to remain strong at around 75%. CEO Jensen Huang emphasized that the demand for AI is still growing rapidly, calling it an industrial revolution. CFO Colette Kress emphasized that sentiment, noting demand from cloud providers, enterprises, and governments alike, and its latest Blackwell chips are fully booked.

Wall Street expects that momentum to continue. Analysts project 2027 revenue of $369 billion and earnings per share of $7.54. That’s a big jump for fiscal 2026, when Nvidia made an estimated $215.9 billion in revenue and $4.77 in earnings per share.

Analysts remain bullish, although their price targets vary. Wedbush’s Matt Bryson recently reiterated his “Outperform” rating and actually raised his 12-month target to $300 from $230. He pointed out that Nvidia’s long-term growth drivers, such as hyperscale cloud infrastructure and enterprise adoption of AI, are “strong.”

Goldman Sachs reaffirmed its stance with a “Buy” rating and a $250 target, raised its earnings forecasts by a few percent after Q4 and said Nvidia’s guidance is very strong. Bank of America and Citigroup fared best, each putting a $300 price tag on the table, citing AI’s upside.

Conversely, a few firms are more cautious. For example, JP Morgan’s target is around $265, marking Tesla’s entry into chips and major risks.

But the overall sentiment is clearly clear. The Wall Street consensus rating on NVDA is “Strong Buy,” and the 12-month price target is $266, which means about 50% upside.

I think Wall Street still sees Nvidia as one of the biggest winners in technology, assuming AI spending continues to grow. As Morgan Stanley says, concerns about losing market share are “overblown,” and Nvidia’s “continued leadership” in AI should allow it to succeed.

At the date of publication, Nauman Khan did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com