Nvidia’s Stock Is Rebounding, but Can It Sustain the Rally?

​Nvidia’s stock has been on a rollercoaster ride in 2025, and after weeks of steep declines, shares are finally rebounding. On Wednesday, Nvidia surged 6.4 percent, clawing back some losses from Monday’s brutal market rout. But while Wall Street is fixated on the sustainability of AI spending, one analyst believes the real key to Nvidia’s recovery lies elsewhere—its profit margins.

Margins Matter More Than AI Hype
According to Bank of America analyst Vivek Arya, Nvidia’s stock movements are closely tied to its gross profit margins, not just AI demand. He notes that Nvidia’s stock peaked in June 2024, the same time its gross margins hit a record 79 percent during the Hopper product cycle. Since then, margins have slipped, and so has the stock.

Currently, Nvidia’s gross margin stands at 73 percent, down due to the company’s transition to its next-generation Blackwell product line. Arya believes that Nvidia’s margins will bottom out in this quarter and then recover to the mid-70 percent range in the second half of the fiscal year. If that happens, the stock could see a stronger and more sustained rebound.

The Blackwell Transition: A Short-Term Drag?
One of the biggest concerns for investors is whether Nvidia can successfully ramp up production of its Blackwell chips. The transition has been more costly and complex than expected, forcing the company to revamp its system architecture. Arya, however, remains optimistic, predicting that the company will overcome these initial hurdles, setting the stage for a margin recovery.

Despite growing competition from Broadcom’s application-specific integrated circuits (ASICs), Arya believes Nvidia will retain 80 to 85 percent of the AI server chip market, keeping it well ahead of its rivals.

What to Expect from Nvidia’s GTC Conference
Next week, Nvidia will host its highly anticipated GTC conference, where CEO Jensen Huang is expected to provide key updates on AI, autonomous vehicles, and quantum computing. Analysts will be closely watching for:
• New Blackwell Ultra chips and details on the Rubin product line, expected to follow in 2026.
• AI software advancements, particularly in generative AI and enterprise applications.
• The future of Nvidia’s automotive AI business, which has been gaining momentum.

While these announcements could provide short-term boosts to the stock, Arya argues that investors should stay focused on margin recovery, as it will ultimately determine Nvidia’s long-term trajectory.

Is Now the Time to Buy Nvidia?
Despite being down 15 percent year-to-date, Nvidia remains one of the most closely watched stocks in the market. Analysts like Arya maintain a buy rating with a price target of $200, betting that higher margins and AI market dominance will fuel a recovery.

But for now, Nvidia’s stock remains in a wait-and-see mode—investors will need confirmation that margins are improving before they can trust the rebound.