Semiconductor company Nvidia (NASDAQ: NVDA) has been a shining star of the artificial intelligence (AI) boom. The stock has advanced more than 800% since January 2023, and the Trump administration's recent decision not to enforce the so-called Framework for AI Diffusion could lead to more share price appreciation.

Image source: Getty Images.

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The Commerce Department rescinded the Framework for AI Diffusion

The Commerce Department during the final days of the Biden administration announced the Framework for Artificial Intelligence (AI) Diffusion, far-reaching rules that limited or prevented the sale of advanced semiconductors in most countries, including some United States allies.

Importantly, the AI Diffusion framework expanded on previously imposed export controls by dividing countries into three tiers with varying degrees of access to U.S. technology:

• First-tier countries were allowed to import advanced AI chips without limit; this group includes 18 close allies, such as Australia, Canada, France, Germany, Japan, South Korea, Taiwan, and the United Kingdom.
• Second-tier countries were permitted to import a limited number of advanced AI chips; this group included most of the world, even countries that were generally on good terms with the U.S., such as India, Israel, Saudi Arabia, Singapore, and Switzerland.
• Third-tier countries were prohibited from importing advanced AI chips; this group included arms-embargoed geographies like China, Iran, North Korea, and Russia.

Nvidia slammed the AI Diffusion rule in a blog post:

Built on American technology, the adoption of AI around the world fuels growth and opportunity for industries at home and abroad. That global progress is now in jeopardy. The Biden administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided 'AI Diffusion' rule, which threatens to derail innovation and economic growth.

The AI Diffusion rule was set to take effect on May 15, 2025, but the Trump administration this week chose to scrap the framework. The Commerce Department said the AI Diffusion rule would have stifled American innovation and undermined diplomatic relations with dozens of countries. Instead, Citigroup analysts think the Trump administration will negotiate export rules on a country-by-country basis.

Nvidia recently struck AI infrastructure deals with Saudi Arabian companies

President Trump recently toured the Middle East, during which a number of U.S. technology companies struck deals with Saudi Arabia that would been complicated or prohibited by the Biden administration's AI Diffusion framework. Nvidia is one of those companies, but the list also includes AMD, Alphabet, Amazon, and Super Micro Computer.

Nvidia and Saudi Arabian company Humain will collaborate to build AI data centers. The initial phase will involve 18,000 Nvidia Grace Blackwell superchips -- which combine Grace CPUs and Blackwell GPUs -- and InfiniBand networking. Additionally, Humain will deploy Nvidia's Omniverse simulation software to test physical AI solutions.

Nvidia will also collaborate with the Saudi Data & AI Authority (SDAIA), a government agency that aims to position Saudi Arabia as a global leader in artificial intelligence. SDAIA will deploy 5,000 Nvidia Blackwell GPUs to build a sovereign AI factory, meaning secure data center infrastructure not controlled by foreign countries.

Importantly, many investors had largely written off the Middle East as a significant source of GPU demand due to the AI Diffusion rules. So, the recent rescission is good news for Nvidia shareholders because it opens a new market for the company. But Nvidia is still facing headwinds. Most notably, the Trump administration recently restricted the sale of H20 GPUs to China.

Wall Street says Nvidia stock is worth buying

Wall Street is overwhelmingly optimistic where Nvidia is concerned. Among the 69 analysts who follow the company, 87% have a buy rating on the stock and the median target price is $160 per share. That implies 18% upside from the current share price of $135.

Importantly, Wall Street's consensus estimate says Nvidia's adjusted earnings will increase 46% over the next four quarters. That makes the current valuation of 45 times earnings look quite reasonable, especially because the company beat the consensus earnings estimate by an average of 7% in the last four quarters. Patient investors who want more exposure to Nvidia should consider buying a few shares today.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Citigroup is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, and Nvidia. The Motley Fool has a disclosure policy.

In the first quarter, hedge fund billionaire Israel Englander of Millennium Management sold 1.2 million shares of Rigetti Computing (NASDAQ: RGTI), reducing his stake in the quantum computing stock by 80%. The sale represented a sharp turnaround from the prior quarter, when Englander purchased 1.4 million shares.

His decision to sell stands out because all six analysts who follow Rigetti have a "buy" rating on the stock. The target prices range from $14 per share to $16 per share, implying upside of 21% to 39% from the current share price of $11.50. Put differently, not one analyst thinks the stock is overvalued at its current price.

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Does Israel Englander know something Wall Street doesn't?

Quantum computers will not replace classical computers for most tasks

Classical computers manipulate binary digits (bits) to perform calculations and run operations, but quantum computers manipulate quantum bits (qubits), which can store exponentially more information. That's because bits can only be ones and zeroes, but qubits can be weighed combinations of ones and zeroes.

That a qubit can simultaneously exist as one and zero is called superposition, and that quality lets quantum computers quickly solve certain problems that would take classical computers years. Quantum computers are particularly well-suited to situations with lots of variables interacting in complex ways, such as simulation and optimization problems.

For instance, a quantum computer would be especially helpful in simulating molecules to accelerate drug discovery and material design. It would also be helpful in optimizing supply chains and logistics routes. But quantum computing will never replace all classical computing. "For most kinds of tasks and challenges, traditional computers are expected to remain the best solution," IBM said on its website.

Image source: Getty Images.

Rigetti reported disappointing financial results in the first quarter

Rigetti builds and operates quantum computing systems. The company designed the first multichip quantum processor, and it offers cloud-based quantum computing services. Management says its full-stack approach spanning hardware and software "offers both the fastest and lowest risk path to building commercially valuable quantum computers."

Rigetti reported disappointing first-quarter financial results that missed estimates on the top and bottom lines. Revenue plunged 51% to $1.5 million, and non-GAAP (generally accepted accounting principles) net income was -$0.08 per diluted share. The company also reported net cash used in operations of -$13.6 million. And Wall Street expects Rigetti to continue losing money through at least 2028.

Rigetti Computing stock is incredibly expensive

So, returning to the original question: Does billionaire Israel Englander know something Wall Street doesn't? Not necessarily. He bought shares when Rigetti caught fire in the fourth quarter. But when the stock rocketed to $20 per share early in the first quarter -- representing a 90-day gain of 2,500% -- Englander may have simply decided to take profits.

Meanwhile, the six Wall Street analysts who follow Rigetti, all of whom have a "buy" rating on the stock, are probably counting on investors' willingness to pay a very high valuation multiple to own a prominent stock in the trendy quantum computing industry. But I think investors have gotten way ahead of themselves with Rigetti.

The quantum computing market is projected to grow at 20% annually through 2030, but spending will total just $4.2 billion at that point, according to Grand View Research. Comparatively, the cloud computing market is also expected to grow at 20% annually over the same period, but spending will total $2.4 trillion. Put differently, the cloud computing market will still be about 570 times bigger than the quantum computing market by the end of the decade.

Quantum computing will undoubtedly be an important technology in the future, but that future is still many years away, and Rigetti currently trades at 290 times sales. To put that in context, cloud computing company Cloudflare trades at 30 times sales, which itself is very pricey. But Rigetti is nine times more expensive. Investors should avoid the stock for now.

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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cloudflare and International Business Machines. The Motley Fool has a disclosure policy.

Only a handful of U.S. companies currently have a market value exceeding $1 trillion. They are listed below in descending order based on the upside (or downside) implied by the median 12-month target price set by Wall Street analysts.

• Nvidia (NASDAQ: NVDA) is currently worth $2.7 trillion. The median target price of $175 per share implies 58% upside from its current share price of $111.
• Amazon is currently worth $2 trillion. The median target price of $266 per share implies 44% upside from the current share price of $185.
• Meta Platforms is currently worth $1.3 trillion. The median target price of $750 per share implies 38% upside from the current share price of $544.
• Alphabet is currently worth $1.9 trillion. The median target price of $210 per share implies 34% upside from the current share price of $157.
• Microsoft is currently worth $2.9 trillion. The median target price of $500 per share implies 29% upside from the current share price of $388.
• Apple is currently worth $3 trillion. The median target price of $250 per share implies 26% upside from the current share price of $198.
• Berkshire Hathaway is currently worth $1.1 trillion. The median target price of $487 per share implies 7% downside from the current share price of $524.

Wall Street analysts collectively see Nvidia as the best trillion-dollar stock to buy as of April 12. The 58% upside implied by the median target price exceeds that of the next closest stock (Amazon) by 14 percentage points. Here's what investors need to know about Nvidia.

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Nvidia is the market leader in artificial intelligence accelerators

Nvidia is best known for its invention of the graphics processing unit (GPU). Those chips first revolutionized computer graphics, but they have more recently become the industry standard in accelerating complex data center workloads like artificial intelligence (AI). Nvidia has more than 90% market share in data center GPUs and more than 80% in AI accelerators.

However, the company is truly difficult to compete with because it supplements its GPUs with an unparalleled software development platform called CUDA, which spans hundreds of code libraries, pretrained models, and frameworks that streamline AI application development across use cases that range from recommender systems to generative AI tools.

Additionally, Nvidia supplements its GPUs with adjacent data center hardware like central processing units (CPUs), chip interconnects, and networking equipment. In fact, Nvidia is the market leader in InfiniBand networking, the most popular connectivity solution for AI. That vertical integration lets Nvidia design data center systems with a superior total cost of ownership, according to CEO Jensen Huang.

Headwinds related to DeepSeek and export restrictions are under control

Nvidia has been battling two material headwinds in recent months, but neither should derail the company in the long run. First, when Chinese start-up DeepSeek trained sophisticated large language models with much less computing power than U.S. companies, the market assumed Nvidia's sales would suffer as investments in AI infrastructure slowed. But that has not happened.

Instead, many analysts think more cost-efficient training techniques will increase the demand for Nvidia GPUs by making AI affordable for more companies. Additionally, the emergence of robotics and reasoning models (large language models for complex reasoning) means AI will require 100 times more computing power than anticipated only a year ago, according to CEO Jensen Huang.

The second headwind Nvidia is battling is the chip export restrictions imposed by the U.S. government. But investors recently got some good news on that front. While Nvidia cannot sell its most powerful GPUs in China, the Trump administration has reportedly chosen not to ban the less powerful H20 processors despite the burgeoning trade war, according to NPR.

Image source: Getty Images.

Nvidia should be a major winner as the physical AI revolution unfolds

Generative AI is only the most recent chapter in a longer book. In his keynote speech at the Computex 2024 event, Jensen Huang said, "The next wave of AI is here. Robotics powered by physical AI will revolutionize industries." Through hardware and software innovation, Nvidia is positioning itself to be a big winner as autonomous machines become more prevalent.

Nvidia Isaac is a robotics development platform that lets engineers build applications for industrial manipulation arms, autonomous mobile robots, and humanoid robots. Additionally, Nvidia recently introduced Isaac GR00T, a customizable model for humanoid reasoning and skills. GR00T will accelerate the design of autonomous humanoids, a market Citigroup says may be worth $1 trillion by 2040.

Looking ahead, Grand View Research estimates that spending across AI hardware, software, and services will increase by 35% annually through 2030. Meanwhile, Wall Street expects Nvidia's earnings to increase by 38% annually through fiscal 2027, which ends in January. That makes the current valuation of 37 times earnings look cheap. Patient investors willing to hold the stock for at least three years should feel comfortable buying a position today.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Citigroup is an advertising partner of Motley Fool Money. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The S&P 500 (SNPINDEX: ^GSPC) peaked in February 2025, then reversed course when the Trump administration began imposing tariffs on foreign goods. Particularly shocking were the reciprocal tariffs President Donald Trump announced on April 2, which would collectively raise the average tax on U.S. imports to its highest level since the early 1900s.

The S&P 500 has since fallen 13% from its record high as Wall Street reacted to the abrupt shift in U.S. trade policy. But on April 9, President Trump paused the reciprocal tariffs for 90 days to allow time for negotiations with individual countries. The only exception was China. The U.S. now charges a 145% import tax on Chinese goods.

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Should investors buy stocks during the 90-day pause? Wall Street expects substantial volatility in the near term, but most analysts think the S&P 500 is headed much higher in the remaining months of 2025. Here are the important details.

The 90-day pause on reciprocal tariffs means 90 more days of stock market volatility driven by uncertainty

Several prominent business leaders have expressed concerns about the tariff schedule that President Trump outlined on April 2. Billionaire hedge fund manager Bill Ackman actually called for a 90-day pause. "I strongly believe launching tariffs on April 9th against the entire world -- massively in excess of what we are being charged -- is a mistake," he wrote.

BlackRock CEO Larry Fink said the U.S. economy is headed toward recession, if not there already, and warned that tariffs could have a more severe impact on inflation than most people anticipate. Fink also speculated that uncertainty created by the 90-day pause has forced companies to pause capital expenditures. Buying property, plants, or equipment is simply not sensible without more clarity on U.S. trade policy.

That uncertainty means many companies will withhold guidance when they report financial results throughout April and May. In turn, the stock market will probably be range-bound yet volatile while investors await more details concerning which goods will be subject to tariffs and to what extent. Case in point, the S&P 500 added over 9% on April 9 when President Trump delayed the tariffs, but it dropped nearly 4% the next day.

However, in a recent CNBC interview, Larry Fink still expressed confidence that companies would continue to allocate capital to data centers, artificial intelligence, and infrastructure, meaning those stock market themes are still viable investment ideas for anyone with a long time horizon. "Long term, I'm less worried about some of these issues. But short-term, I'm petrified by some of these issues," he said.

Image source: Getty Images.

Wall Street has become increasingly pessimistic, but most analysts still see significant upside in the stock market

Wall Street was rife with enthusiasm when the year started. Analysts expected the Trump administration to focus on deregulation and tax cuts to supercharge the economy. Instead, the administration has fixated on trade policy and tariffs to the point where many business leaders and economists now anticipate a U.S. recession.

What makes that particularly remarkable is that President Trump inherited an economy that was "the envy of the world with 2.8% growth last year," according to The Wall Street Journal. However, he seems to have squandered that momentum by not only outlining the most aggressive tariff hikes in U.S. history but also sending mixed messages by whipsawing on policy decisions.

Consequently, Wall Street has become increasingly pessimistic. The consensus full-year earnings estimate for S&P 500 companies has dropped from 14.3% in December to 9.8% in April, according to LSEG. Also, among the 17 investment banks and research firms listed in the chart below, the median year-end forecast for the S&P 500 has been cut from 6,600 to 6,100 during the same period.

Source: Yahoo Finance and Reuters.

Among the 17 investment banks and research firms listed in the chart above, the median year-end target for the S&P 500 is 6,100. That forecast implies 14% upside from its current level of 5,363.

As mentioned, many of the institutions above have downwardly revised their forecasts to account for slower economic growth and higher inflation caused by changes in U.S. trade policy. Expect more downward revisions if the Trump administration reinstates the same tariff schedule following the 90-day pause. However, the stock market could soar if the U.S. can negotiate more favorable terms while duties are delayed.

As things currently stand, many Wall Street analysts think the stock market will generate significant returns in the remaining months of 2025. Indeed, the median target price implies the S&P 500 will approach its previous record high of 6,144 by year end.

Investors should not take those gains for granted -- no one knows what President Trump will decide during the 90-day pause -- and the situation could get much worse if the reciprocal tariffs outlined by Trump take effect once the postponement expires. However, putting money into high-conviction stocks at a measured pace is a sensible decision in the current environment. But that only applies to investors who plan to leave their money in the market for at least three to five years.

Should you invest $1,000 in S&P 500 Index right now?

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Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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