The past few years have been a non-stop thrill ride nvidia(NASDAQ: NVDA ) Investors say the company’s market cap was just $359 billion to start 2023. Now, it’s worth more than $3.35 trillion (as of this writing) — a ninefold increase in less than two years.
Driving Parabolic Move are the company’s graphics processing units (GPUs), which quickly became the gold standard for powering. artificial intelligence (AI). This has led to revenue that grew 480% and net income that grew 1,270% from the start of 2023.
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Investors shouldn’t expect growth of that magnitude, but there’s plenty of evidence that Nvidia still has plenty of gas in the tank. Many of the world’s biggest tech companies Continue to invest heavily to upgrade their infrastructure to handle the rigors of AI — and for most of them, that means stocking up on Nvidia’s cutting-edge processors.
Obvious secular tailwinds aside, investors may be overlooking an important detail that could signal a big move for Nvidia in 2025. Read on to find out why.
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For Nvidia’s fiscal 2025 third quarter (ended Oct. 27), revenue of $35.1 billion rose 94% year over year, while its earnings per share (EPS) of $0.81 rose 103%. Results were well ahead of management’s forecast, with revenue up 79%.
Management was clear about what fostered effective performance. “The age of AI is in full swing, driving a global transformation at Nvidia Computing,” said CEO Jensen Huang.
Digging into the results, the top-line move was driven by continued strong demand within Nvidia’s data center segment, which grew 112% to $30.8 billion during the year. Much of that revenue was derived from the company’s Hopper architecture, the foundation of its H200 Tensor Core GPU, and its GH200 Grace Hopper superchip — which are currently powering many of the world’s data centers and AI infrastructures.
While these processors are currently the benchmark, they are about to be replaced by Nvidia’s Blackwell architecture, which represents the next generation of its AI-focused chips.
The company is working to ramp up production of Blackwell processors and has previously said it expects to ship “several billion dollars” worth of these chips in the fourth quarter of its fiscal 2025 fiscal year, which ends in late January.
Nvidia has made no bones about strong demand, with major tech companies scoffing at being among the first to receive these next-generation AI-focused chips. In an interview with CNBC, Huang said Blackwell’s demand was “insane.” He added, “Everyone wants to achieve the most, and everyone wants to be first.”
Everyone wants to get their hands on these chips, supply is currently outstripping demand, and the situation isn’t expected to be resolved for several quarters. During the earnings call, Chief Financial Officer Colette Kress said, “Demand for Blackwell is staggering, and we are racing to scale supply to meet the incredible demand.” In his written comments, he stated (emphasis mine), “Both the Hopper and Blackwell systems have some supply limitations, and Demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026For context, Nvidia’s fiscal year 2026 begins in late January.
The resulting pent-up demand could serve as a springboard for Nvidia’s sales to come next year.
I’m not the only one who thinks so. Beth Kindig, CEO and lead technical analyst for I/O Fund, believes that in 2025, sales of Blackwell processors will overtake sales of Nvidia’s GPUs for 2023 and 2024 — combined. Kindig says the company’s unbridled pricing power could power at least 50% growth in its data center segment next year. This could rise to 70% for the stock in 2025.
The race continues to increase the availability of its flagship processor, as Nvidia works with its suppliers to ramp up production. As the supply of these next-gen processors increases, so will the company’s revenue, since higher production means more chips available to sell. That, in turn, will supercharge already strong profits, driving up its stock price.
To be clear, we don’t know Absolutely While supply bottlenecks will ease, Nvidia has a vested interest in removing the bottleneck as soon as possible. Management has historically been conservative with its estimates, so we can perhaps A gradual increase in supply of these top-end chips is expected, which will be the catalyst to boost Blackwell’s sales as the year progresses.
Some investors have resigned themselves to the fact that Nvidia’s growth has already peaked. I believe the scenario is bearish and represents an opportunity for savvy investors with a long-term perspective. Its premium valuation has already started to ease. Wall Street is predicting the company will generate EPS of $4.41 in fiscal 2026, which works out to just 31 times next year’s sales (as of this writing).
Sometime in 2025, evidence suggests, supply of Nvidia’s best-of-breed Blackwell AI chips will accelerate, leading to a corresponding increase in sales. I predict that this will be the catalyst that ignites the stock price, sending it higher in 2025.
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