Nvidia (NVDA), once the darling of Wall Street, finds itself in a moment of introspection. While the stock has slipped 8.5% in the past month, analysts suggest this is just a temporary chill, and the company remains poised for long-term growth. According to Bank of America analyst Vivek Arya, Nvidia’s recent challenges are part of the natural “growing pains” that accompany transformative innovation.

The Challenges: Execution and Market Forces

At the center of Nvidia’s “soul-searching” moment lies the transition to its new AI chip, Blackwell. Introduced with great fanfare in March, Blackwell is Nvidia’s most powerful GPU yet. However, delays in delivering the product to market have spooked investors. Arya explains, “The last two quarters have not been clean because they are going through the growing pains from one generation of product to a new generation.”

Issues with mask configurations and system-level designs have further complicated the rollout. Meanwhile, external pressures, such as concerns over exposure to China and potential tariffs under the Trump administration, have added to investor uncertainty.

The Bigger Picture: A Long-Term Upside

Despite these headwinds, Arya and many on Wall Street remain bullish. Blackwell, once fully scaled, is expected to bring billions in revenue by 2025 and advance generative AI capabilities. Nvidia CEO Jensen Huang’s upcoming keynote at CES 2025 could provide a short-term catalyst for the stock, as the market eagerly anticipates updates on the product’s rollout.

Arya also highlights Nvidia’s resilience, noting that while the company faces near-term gross margin pressures, these issues are likely to resolve within a quarter or two as the product scales. He likens Nvidia’s current position to Apple before the launch of the App Store: the potential for monetization is vast, but the infrastructure is still being built.

What This Means for Investors

With 94% of sell-side analysts rating Nvidia as a Buy or Strong Buy, the stock’s long-term narrative remains compelling. Nvidia’s ability to navigate current execution challenges and capitalize on Blackwell’s potential could unlock significant value for investors.

However, the journey may not be smooth. Near-term volatility and market uncertainties could continue to weigh on the stock. Investors should weigh these risks against Nvidia’s proven track record of innovation and leadership in AI.

This article is not financial advice and should not be taken as an investment recommendation.