After surging over 1,000% between October 2022 and November 2024, Nvidia (NVDA) stock is down more than 30% from its all-time highs. Investors are concerned about trade war escalations, slowing revenue growth, and a challenging macroeconomy in 2025.
Nvidia Plans to Acquire Lepton AI
Valued at a market cap of $2.69 trillion, Nvidia is among the largest companies in the world and is at the epicenter of the artificial intelligence megatrend. Its graphics processing units, or GPUs, are used to train, build, and deploy AI platforms such as ChatGPT and Claude. Nvidia continues to expand its portfolio of products and recently disclosed plans to acquire Lepton AI, a server rental startup.
However, Jim Chanos, one of Wall Street’s most popular short sellers, raised concerns about Nvidia’s reported acquisition plans, suggesting potential underlying issues at the chip giant. In a recent post on X, Chanos flagged Nvidia’s interest in acquiring Lepton AI.
“Don’t know if this deal happens, and it’s not particularly big, but trying to buyout your resellers is usually a huge red flag. It’s often a way to bury inventory costs and/or avoid receivables provisioning,” Chanos wrote.
Nvidia is in advanced talks to acquire Lepton AI, a two-year-old startup that rents out servers powered by Nvidia’s AI chips. The deal is reportedly worth several hundred million dollars. Lepton AI, based in Cupertino, competes with other AI infrastructure providers like Together AI by renting Nvidia GPU servers to customers.
The acquisition comes as Nvidia faces pressure to diversify beyond hardware sales, with cloud providers increasingly developing their own chips to reduce dependency on Nvidia’s products.
Despite these challenges, Nvidia continues to dominate the AI chip market, recently reporting $39.3 billion in fourth-quarter revenue — a 78% year-over-year increase — with projections of $43 billion for the first quarter of its fiscal 2026.
Is NVDA Stock Undervalued?
Nvidia is a semiconductor giant that grew its revenue from $6.91 billion in fiscal year 2017 (ended January) to $60.9 billion in fiscal year 2024. During this period, its gross margins widened from 58.8% to 75%. A rapidly growing top line and improving profitability have allowed the chip maker to report adjusted earnings per share of $2.99 in fiscal year 2025, up from $0.08 in 2017.
Nvidia’s growth story is far from over, given that its revenue is forecast to surge to $310 billion in fiscal year 2030, while adjusted earnings are forecast at $7 per share. Analysts expect earnings to grow by 18.6% annually in the next five years. Comparatively, its free cash flow is expected to touch $193 billion in 2030, up from $60.7 billion in 2025.
It suggests that Nvidia’s free cash flow margin will increase from 46.5% to 62.2% over the next five years. Today, NVDA stock is priced at 44.3x forward FCF. If we assume it will trade at 30x FCF in the future, the tech stock should be valued at $5.79 trillion in early 2030, indicating upside potential of 115% from current levels.
Out of the 44 analysts covering Nvidia stock, 38 recommend “Strong Buy,” two recommend “Moderate Buy,” and four recommend “Hold.” The average target price for NVDA stock is $177, which is 73% above the current trading price.
