Nvidia's AI Dominance and Stock Outlook for 2025: Potential for Continued Growth

Could Buying Nvidia Stock Today Set You Up for Life?

There's no denying the fact that Nvidia (NVDA 1.18%) has turned out to be a life-changing investment for anyone who bought shares of this chipmaker a decade ago. That's because Nvidia stock has delivered remarkable gains of more than 26,800% in the past 10 years, significantly crushing the 195% gains that the S&P 500 index has clocked over the same period. Investors who bought and held Nvidia stock for such a long time have been able to benefit from multiple catalysts, such as the growth in the video gaming market, the increasing deployment of its graphics processing units (GPUs) in data centers, and additional growth opportunities in markets such as automotive and digital twins. However, the stunning surge in Nvidia stock over the past decade has made it the second-largest company in the world, with a market cap of just under $3.4 trillion. Expecting Nvidia stock to replicate its eye-popping performance over the coming decade looks like a far-fetched idea, considering that the size of the global economy is expected to hit $110 trillion this year. That number is expected to jump to almost $140 trillion by 2029, which means that a 35-fold jump in Nvidia stock over the next five years would make it bigger than the global economy. Of course, that's absurd. Moreover, investors should note that betting on just one stock in anticipation that it could change your life may not be the best idea. But at the same time, Nvidia may still have more upside to offer to investors in the long run in view of the huge addressable revenue opportunity it's sitting on, which is why it could find a place in a diversified portfolio. Let's take a closer look at the potential catalysts for Nvidia and check why having this stock as a part of your portfolio could turn out to be a smart long-term move. Nvidia's total addressable market is well above $1 trillion In its investor day presentation of 2022, Nvidia management pointed out that it has a $1 trillion revenue opportunity. The company broke down this opportunity as follows: $100 billion in gaming, $300 billion in automotive, $150 billion in enterprise artificial intelligence (AI) software, $150 billion in Omniverse enterprise software, $150 billion in enterprise chips and systems, and another $150 billion in hyperscale chips and systems. However, that addressable opportunity seems to have grown immensely in the past couple of years. For instance, Nvidia management now sees a $1 trillion revenue opportunity in data center chips alone. That's because the chipmaker is now forecasting a transition from general-purpose computing to accelerated computing in data centers to help reduce electricity consumption and increase computing power at the same time. On Nvidia's August earnings conference call, CEO Jensen Huang remarked that accelerated computing "enables you to do computing at a much larger scale, for example, scientific simulations or database processing, but what that translates directly to is lower cost and lower energy consumed." He added that it won't be "unusual to see someone save 90% of their computing cost" by moving from general-purpose computing to accelerated computing. Accelerated computing is made possible by accelerators such as GPUs, a market that Nvidia dominates. It reportedly controlled 98% of the data center GPU market last year. That's not surprising, since rivals such as AMD are way behind Nvidia when it comes to data center revenue. So, if we assume that Nvidia's revenue opportunity in gaming, automotive, enterprise AI software, and Omniverse software has remained constant over the past couple of years at a combined $700 billion, its overall total addressable market now sits at an impressive $1.7 trillion. Given that Nvidia is expected to finish the ongoing fiscal year 2025 with $129 billion in revenue, the massive addressable market indicates that the company's outstanding growth could be sustained for a long time. This is probably the reason why there has been a notable increase in Nvidia's consensus revenue estimates for the next couple of years. NVDA Revenue Estimates for Current Fiscal Year data by YCharts. Consistent growth in Nvidia's earnings could result in terrific upside The healthy growth in Nvidia's top line explains why the company's earnings are also expected to grow at a nice pace going forward. NVDA EPS Estimates for Current Fiscal Year data by YCharts. Nvidia finished the previous fiscal year with earnings of $1.30 per share, and its bottom line is on track to more than double this year. The chart above shows that its earnings could increase by 50% in the next fiscal year, followed by a 26% increase in fiscal 2027. If we assume that Nvidia manages to make the most of the lucrative addressable market on offer and clocks 15% annual earnings growth for the next 10 years, its bottom line could hit $11.93 per share (using the current fiscal year's projected earnings of $2.95 per share as the base). The stock is currently trading at 32 times forward earnings, which is a discount to the company's five-year average forward earnings multiple of 41. If the market decides to reward Nvidia with a richer multiple and it trades at 41 times earnings after a decade (in line with the five-year average), its stock price could hit $489 per share based on the projected earnings of $11.93 per share. Reaching that level would be a 254% increase from current levels, and it doesn't look impossible. Hence, investors can consider buying Nvidia stock to hold it for the long run, as it still could help them get richer.

Should You Buy Nvidia Stock Hand Over Fist Before the End of 2024? Here's What History Suggests. | The Motley Fool

Another year, another huge gain. That's what appears to be shaping up for Nvidia (NVDA 1.18%). Shares of the GPU maker are up big with only a few weeks remaining in the year. It's too late for investors who don't own Nvidia to benefit from the stock's past performance. But should you buy Nvidia stock hand over fist before the end of 2024? Here's what history suggests. There's often no reason to hurry to buy a stock. Whether you purchase shares immediately or a few months later doesn't matter too much in many cases. However, it's been a different story with Nvidia. The company conducted its initial public offering on Jan. 22, 1999. In the nearly 25 years since then, Nvidia has delivered a positive return in the first quarter 20 times. The stock's average Q1 gain is an impressive 19%. If you waited until after the beginning of the year, you would have been poorer most of the time. In 14 of Nvidia's 25 full first quarters since its IPO, the stock has delivered a double-digit percentage gain. The most impressive performance came last year when Nvidia's share price skyrocketed 90%. But the first quarter of 2024 ranks as the stock's second-best Q1 performance ever with a huge gain of 82.5%. Granted, Nvidia has turned in some dismal Q1 performances. In the first quarter of 2008, the stock plunged roughly 42%. However, over the last 10 years, Nvidia has experienced only one negative first quarter with its shares falling around 7% in Q1 of 2022. Of course, most investors won't buy Nvidia shares before the end of a given year and then sell them three months or so later. How has the stock performed over longer periods? Nvidia delivered a positive return in 17 of the 23 three-year periods since the company's IPO (including the period between 2022 and 2024). The average return for these three-year periods was around 195%. But if you bought before the end of a given year and held onto the stock for five years, you'd really be sitting pretty. Nvidia's share price has risen in 19 out of 21 five-year periods since its IPO. The average return for these five-year periods was a staggering 551%. What's the bottom line from a historical standpoint when it comes to buying Nvidia stock before the end of the year? It nearly always pays off handsomely. Now for the bad news: There's a good case to be made that history doesn't matter much regarding investing in Nvidia. Why? The present is unlike the past. Most of Nvidia's stellar performances in previous years came before the generative AI explosion. Interest rates were also much lower during the period when Nvidia delivered its greatest gains. Rivals are scrambling to develop chips that compete with Nvidia's GPUs. The stock's future returns may be significantly lower in the future as the supply of AI chips catches up with demand, interest rates remain higher (relatively speaking), and competition intensifies. However, there's also an argument that Nvidia's future could be even brighter than its past. CEO Jensen Huang believes that the company's new Blackwell GPU architecture could become the most successful product in not only Nvidia's history but in "the history of the computer." Importantly, Nvidia is now on a yearly cycle of launching new chips, so even more powerful GPUs will be on the way after Blackwell. AI is still only in its early innings. New advances, potentially including artificial general intelligence (AGI), could boost Nvidia's growth like never before. Even if we eliminate AI altogether, the company could have a $1 trillion opportunity as organizations shift from general-purpose computing to accelerated computing. If you think Nvidia's growth prospects will improve (and there's good reason to do so), throw out the history books: Buying this stock hand over fist before the end of the year makes perfect sense.

Should You Buy Nvidia Stock Before Jan. 6? | The Motley Fool

Despite the increased share price volatility, Nvidia is a smart pick for December 2024. Nvidia (NVDA 0.28%) reported a stellar performance for the third quarter of fiscal 2025 (ended Oct. 27, 2024), with revenue and earnings soaring year over year by 94% and 109%, respectively. The company reported revenue of $35.1 billion, far ahead of its guidance of $32.5 billion -- driven by broad-based strength across businesses. Unsurprisingly, the artificial intelligence (AI)-powered data center segment was the company's major growth catalyst, with revenue rising 112% year over year to $30.8 billion. Despite the amazing earnings performance, Nvidia's share price dropped slightly after the report's release. Investors were disappointed and seemed to have expected a stronger performance. The increased hype around Nvidia over the past two years made it difficult for the company to surpass market expectations. However, the market sentiment may soon change for the better. CEO Jensen Huang will deliver the opening keynote at the 2025 CES (Consumer Electronics Show) on Jan. 6. Here, Nvidia is expected to release next-generation graphics processing units (GPUs) such as the RTX 5080 and RTX 5090. With major announcements anticipated in early January 2025, share prices may see an impressive boost in the coming months. Should you buy Nvidia stock before this upcoming catalyst? Nvidia has positioned itself as a leading data-center-scale AI infrastructure company. With central processing unit (CPU)-based coding being increasingly replaced by GPU-based machine learning and neural network algorithms, nearly $1 trillion worth of installed base of data center infrastructure needs to be upgraded. Additionally, the increasing adoption of generative AI technologies has given rise to AI factories, a new AI-based industry requiring tens of thousands of GPUs and generating a wide range of digital intelligence. Nvidia expects AI factories to become a multitrillion-dollar industry. All these trends bode well for Nvidia's AI-optimized hardware and software offerings. Subsequently, Nvidia's Hopper architecture GPUs continue to be in high demand. The H200 GPU, the successor to the widely successful H100 GPU, has seen the fastest product ramp-up in Nvidia's history, driven by widespread adoption from major cloud service providers, including Amazon Web Services, Microsoft Azure, and CoreWeave. H200 sales reached double-digit billions by the end of the third quarter. Nvidia's next-generation Blackwell architecture systems (full-scale, full-infrastructure, AI data-center scale systems with customizable configurations) are also expected to be a major growth catalyst in 2025. The company has shipped 13,000 GPU samples to customers in the third quarter. With demand for Blackwell far outpacing supply, Nvidia will continue to charge premium pricing for these offerings. Nvidia has also established itself as the largest inference platform (inference is executing machine learning or AI models in real-time) globally, thanks to its large installed base of AI-optimized GPUs and robust software ecosystem. While previously used for training foundational models, the same hardware is also being transitioned for inferencing with the help of software frameworks, libraries, and algorithms. Nvidia is seeing robust demand for its cloud-native enterprise AI software suite services since it has become a preferred inferencing platform for enterprises designing, building, and deploying AI agents and copilots. Currently, over 1,000 companies are using Nvidia NIM microservices, a part of the Nvidia Enterprise software suite. With billions of AI-powered agents expected to be deployed in the coming years, enterprise AI will be a major growth opportunity for Nvidia. Furthermore, Nvidia's Omniverse platform (a set of tools that helps developers design and create real-world simulations) stands to benefit significantly from ongoing advances and the increasing adoption of industrial AI and robotics. Nvidia's networking business is also proliferating, with revenue rising 20% year on year in the third quarter. Strong demand for InfiniBand and Ethernet switches, SmartNICs, and BlueField DPUs from cloud service providers and supercomputing centers to power their AI-optimized GPUs has been a major catalyst for Nvidia. Analysts are mostly optimistic about this high-flying AI stock. Among the 67 analysts covering Nvidia stock, the median target price is $175, implying an upside of 26.6% at the time of writing (as of Nov. 29). Nvidia currently trades at a price-to-earnings (P/E) ratio of 54.4, far lower than its five-year average P/E multiple of 75.8. The company's growth-adjusted P/E ratio, namely the price/earnings-to-growth (PEG) ratio of 0.23, is also quite reasonable. All this means that Wall Street is still very bullish about the stock and sees significant upside potential. Nvidia is the undisputed leader of the global AI market -- expected to be worth $826.7 billion by 2030 (as per conservative estimates) and enjoys exceptional pricing power compared to the competition. Considering its strong technological moat, large installed base, widespread adoption of hardware and software, and robust financial growth trajectory, it may make sense for astute investors to pick up at least a small position in the stock -- ahead of its share price catalyst in early January 2025.

3 Reasons to Buy Nvidia Stock as the UBS Global Technology and AI Conference Gets Underway | The Motley Fool

It seems Nvidia (NVDA 1.18%) is a victim of its own success. After another incredible quarter in which it doubled its earnings per share (EPS) year over year, the chipmaker's stock sank in the days following its Q3 numbers release. The fact is, expectations could hardly be higher. It's a good thing the company appears to be still firing on all cylinders. This isn't the first time it's been in this situation, and it's likely not the last. Nvidia saw its stock retreat nearly 20% in the weeks following its last release, only to gain nearly 35% from that low. There is good reason to remain optimistic, as the next year is full of major catalysts for the company. On Tuesday, Dec. 3, Nvidia joined other leading Artificial Intelligence (AI) firms to discuss the future of the industry with the investment community. The annual UBS Global Technology and AI Conference presents a chance for Nvidia to show continued leadership and make the case for why it has so much further to go. The event marries the technical with the practical, shedding light on just how impactful AI can be in creating real-world value. While one event is unlikely to move the needle, every chance the company -- and the industry, for that matter -- has a chance to make its case count. Here are three reasons why Nvidia is a buy as the event gets underway. Look, this is hardly news, but it bears repeating: the AI market is huge, growing rapidly, and there's ample reason to believe this will continue. PwC -- one of the "big four" accounting firms -- believes AI can add $15.7 trillion to the global economy by 2030. Statista predicts a compound annual growth rate (CAGR) for the total AI market of 28.3% through 2030. It's not just the analysts and talking heads that think so; CEOs from around Silicon Valley reiterated their commitment to AI and, more to the point, to spending billions of dollars on AI infrastructure. In Meta's last earnings call, CEO Mark Zuckerberg stated that despite record capital expenditures, his company "should invest more" because AI will "accelerate [Meta's] core business" and "should have strong ROI over the next few years. That is great news for Nvidia. The company's chips supply the vast majority of the industry, and this market dominance is expected to continue in the foreseeable future. At this point, not even AMD can offer a chip that matches the performance of Nvidia's flagship chips. While this lead will likely shrink as time passes, it's doubtful Nvidia's would be leapfrogged. Nvidia has enormous resources -- in capital and talent -- it can use to defend its pole position. Blackwell, Nvidia's newest line of Superchips, releases this month, and samples are already in the hands of many of its major clients. The chips are incredibly powerful, more than twice as powerful as its current Hopper chips, and demand for them is at a fever pitch. CEO Jensen Huang described the demand as "staggering" and reports have indicated the company has been sold out of them for a full year. This is a big moment for Nvidia, and Wall Street is keen to see the company deliver a successful launch. If there are hiccups expected, Nvidia's executive team certainly didn't share them in its Q3 earnings call. The team painted a rosy picture of the next year and Blackwell's roll-out, expecting more Blackwells to ship than previously expected. I think there is a good chance that revenue from Blackwell will be even larger than Wall Street expects, but we will learn much more in the coming months. The term has been thrown around a lot recently, but a big focus of Nvidia's call, apart from the launch of Blackwell, was the development and adoption of agentic AI -- essentially AI that can actually do, not just create. Jensen Huang likes to think of them as "AI coworkers" that can "assist employees in performing their jobs faster and better." I think that agentic AI if done well, is where the real value of AI lies. This is where true efficiencies can be made throughout organizations of all types. One of the ongoing questions in the market as a whole is whether AI can deliver value that justifies the enormous costs involved. If it can, this is where we will see it. Nvidia is ahead of this trend, offering "an operating platform of agentic AI," as Huang puts it, insisting that industry leaders are already using it to build "copilots" -- an industry term for AI helpers and agents.

Prediction: Nvidia Stock Will Soar in 2025, and Not Just Because the AI Boom Is Building Steam | The Motley Fool

Nvidia (NVDA 2.15%) was the single best performing stock in the S&P 500 (^GSPC 0.56%) in 2023, and it ranks as the fourth-best performing member of the index year to date in 2024. Its share price has increased 845% during that period due to strong earnings growth driven by tremendous demand for its graphics processing units (GPUs). Nvidia is once again poised to generate market-beating returns for shareholders in 2025. The most obvious reason is its leadership in artificial intelligence (AI) accelerators, a market where spending is projected to grow at 29% annually through 2030, according to Grand View Research. But there are less obvious factors at play, too. Read on to learn more. Forrester Research analysts led by Mike Gualtieri recently wrote, "Without Nvidia's GPUs, modern AI wouldn't be possible." There are two reasons for the company has become so dominant: (1) Nvidia GPUs are supported by an unmatched ecosystem of software development tools called CUDA, and (2) Nvidia GPUs consistently outperform rival chips at AI training and inference tasks. Building on that second point, Nvidia is currently ramping production of its next-generation Blackwell GPU, which offers up to 4 times faster AI training and 30 times faster AI inferencing versus the previous Hopper GPU architecture. CFO Colette Kress recently told analysts that "Blackwell demand is staggering." Indeed, the new chip is already sold out for 12 months. Additionally, CEO Jensen Huang has said the Blackwell GPU architecture may be the most successful product in company history, and perhaps the history of the entire computing industry. That sets Nvidia shares up for market-beating returns as Blackwell sales hit the top line next year. Nvidia's gross margin peaked at 78.4% in the first quarter of fiscal 2025, which ended in April 2024. That figure has since contracted to 74.6%. Bears attribute that margin decline to an erosion in pricing power brought on by competition, overlooking the fact that Nvidia's operating margin is 18 percentage points above that of the next closest Magnificent Seven company. Admittedly, Nvidia does face competition from other chipmakers and even some of its own customers. For instance, Amazon, Microsoft, and Alphabet have developed custom AI accelerators. But those competitors lack a software development ecosystem that rivals CUDA, something Nvidia has been building nearly two decades. That ultimately makes competing chips much less useful to developers. So, Nvidia shareholders have little to fear from competition in the near term. Indeed, CFO Colette Kress says Blackwell gross margins should be in the mid-70% range after the production ramp. In other words, while gross margin may drop a little more in the next quarter or two, it should rebound thereafter. That pokes a hole in the theory that Nvidia is imminent danger of losing pricing power. Indeed, Morgan Stanley analyst Joseph Moore recently commented, "The market tends to underestimate the difficulty of competing with Nvidia." That should become increasingly clear next year, and the stock could soar as investors fully appreciate Nvidia's dominance. President-elect Donald Trump has proposed lowering the federal corporate income tax rate to 15%. While a lower corporate tax rate has not always led to a boom in the broader stock market, it could move the needle for individuals companies by boosting profit margins. In turn, excess capital could be returned to shareholders through stock buybacks and dividends. Importantly, Nvidia repurchased about $26 billion worth of its stock during the 12-month period that ended in June 2024. Only three other companies in the S&P 500 allocated more to share buybacks during that period: Apple spent $96 billion, Alphabet spent $63 billion, and Meta Platforms spent $41 billion, according to S&P Global. Nvidia could lean further into stock buybacks if the corporate tax rate was lowered. That would accelerate earnings-per-share growth by reducing the outstanding share count. So, a reduction in corporate taxes could result in Nvidia's earnings growing more quickly than Wall Street analysts anticipate, which could drive shares higher. Admittedly, while the Trump administration could get legislation through Congress in 2025, any changes would not take effect until the next year. That means Nvidia would not see any benefit in 2025 even in the best case scenario. But the stock market is forward-looking, so if investors believe the tax rate will decline, the impact could be priced into the stock next year. Nvidia's market value has increased more than nine-fold since the beginning of 2023, but the company's stock still trades at a surprisingly reasonable valuation, especially in comparison to other AI companies. Wall Street expects Nvidia's adjusted earnings to grow 50% over the next year, and the stock currently trades at 52.7 times adjusted earnings. Those numbers give a price-to-earnings-to-growth (PEG) ratio slightly above 1. Listed below are PEG ratios (calculated in exactly the same manner) for other popular AI stocks: In general, PEG ratios below 1 are considered cheap, and values between 1 and 2 are seen as reasonable. In that context, Nvidia shares are remarkably inexpensive at their current share price of $138, which positions the stock for market-beating returns next year.

Here's the 1 Potentially Disappointing Thing About Nvidia You Need to Know Right Now

This year, Nvidia (NVDA 2.15%) stock has been on fire, soaring more than 170% so far, and there have been plenty of good reasons for this top performance. The tech giant has proven its dominance in the artificial intelligence (AI) chip market, showing that the world's biggest AI customers are lining up to get their hands on its latest platform. Nvidia says demand for its upcoming Blackwell architecture and chip has surpassed supply, and that's set to continue. The company's successes have translated into massive earnings growth, with quarterly net income and revenue climbing in the triple digits in recent times. This has led to other milestones for Nvidia too. For example, the Dow Jones Industrial Average invited the company to join. And Nvidia's market cap, thanks to its incredible stock performance, has skyrocketed, helping it temporarily soar past Apple to become the world's most valuable company. (It's since returned to the second spot, with a market value of $3.3 trillion.) All of this sounds fantastic. But if you're considering buying Nvidia stock or already hold shares, there's one potentially disappointing thing about the company you need to know right now. Nvidia's soaring market value First, though, a quick summary of the Nvidia story so far. Nvidia wasn't always a technology giant. As recently as 2019, Nvidia's market cap totaled less than $100 billion. And five years before that, the company registered a market value of less than $10 billion. Nvidia historically was known for its top-performing graphics processing units (GPUs), chips that power the exciting sounds and images of video games; the gaming industry was its biggest customer. But it was clear the GPU could be useful in other industries too, so Nvidia expanded its focus, and with the AI boom, Nvidia's GPU saw demand soar. As the ideal tool to accelerate crucial AI tasks such as the training and inferencing of models, Nvidia's GPU soon became the go-to chip for companies developing AI platforms. Nvidia has expanded well beyond the GPU and today offers a wide variety of AI products and services, making it almost the one-stop shop for AI customers. And today, Nvidia has reached a key milestone: the launch of Blackwell. In the third quarter, the tech giant shipped 13,000 GPU samples and currently is in the process of ramping production. Now, let's consider the one disappointing element that could perturb some investors and even weigh on Nvidia's stock performance. And here I'm talking about revenue growth. As mentioned earlier, the company has steadily delivered triple-digit growth quarter after quarter -- until this recent Q3. Revenue growth slowed to the double digits, climbing 94% to more than $35 billion. And the company predicts revenue growth of about 70% year over year for Q4, showing a continued slowdown. What some growth investors may do Seeing this trend, some growth investors may be disappointed and turn away from Nvidia in favor of smaller up-and-coming companies that offer higher growth levels. This may weigh on stock performance. It would be great if Nvidia could continue generating triple-digit revenue growth even after becoming a well-established market giant. But, realistically speaking, once a company reaches the level of revenue Nvidia has reached, it's much more difficult to deliver triple-digit growth every quarter. A year ago, Nvidia's comparison quarters were much easier to beat than they are today. Just two years ago, Nvidia reported Q3 revenue of only $5.9 billion. This year's Q3 represents a 490% gain from that level. This means that, though it may be disappointing to see slower growth, it isn't a negative sign and doesn't really suggest a slowdown. Demand for Nvidia's products and services is booming, and the company maintains a gross margin of more than 70%, showing high profitability on sales. So, it's important to put the slowdown in growth into context, and when this is done, it's clear that Nvidia isn't losing steam but instead moving on to its next phase of growth, which, considering solid growth prospects for the AI market, could lead to mind-boggling revenue well into the future.

Want to Know What's Next for Nvidia? Look at This 1 Key Number. | The Motley Fool

Business has exploded for Nvidia (NVDA 1.18%) over the past few years, with revenue surging in the triple digits quarter after quarter, and reaching record levels well into the billions of dollars. This is thanks to the company's position in one of today's highest-growth markets: artificial intelligence (AI). Nvidia dominates the AI chip market, with 80% share, and also has built an AI empire, selling a wide variety of related products and services to customers. And that's helped the stock to skyrocket, gaining 2,400% over the past five years and heading for an annual increase of about 180%. Now, against this backdrop, Nvidia has reached a transition point. Its pace of revenue growth slowed in the recent quarter, and the company is beginning to launch a key product. Investors are carefully watching and wondering if Nvidia, following this big moment, will keep up its momentum or if it's settling into a phase of slower growth. Want to know what's next for this AI giant? A look at one key number could offer us some clues. First, let's check out Nvidia's path so far, including the recent slowdown. Nvidia's graphics processing units (GPUs) have emerged as the fastest on the market, making them a key part of AI programs, and this has resulted in major demand from the world's biggest tech companies. Players like Meta Platforms, eager to supercharge AI programs, and Amazon, aiming to offer the world's best AI tools to customers through its Amazon Web Services business, have flocked to Nvidia for its products in recent years. And this has translated into soaring demand for the company's newest offering, the Blackwell architecture and chip. Nvidia called demand "staggering" in its recent earnings call and has said it surpasses supply. In spite of all of this, Nvidia's revenue growth slowed in the recent quarter, shifting to double-digit growth from the triple-digit growth we've seen in previous quarters. Before worrying though, it's important to take a look at the actual revenue figures, and here, we can see that comparison quarters have become very difficult. Considering demand for Nvidia's products at the earlier stages of the AI boom, it was "easy" for the company to increase revenue in the triple digits in the second quarter of the 2024 fiscal year, for example, from the level of about $6 billion in the year-earlier period. Today, it's more difficult to do this with quarterly revenue topping $35 billion. So, I wouldn't look at this revenue trend as a sign of a slowdown at Nvidia. Now, let's consider what's next for Nvidia, using a key number to help us. And this is gross margin. Along with Nvidia's surging revenue, the company has been able to maintain margins of more than 70% -- so it's highly profitable on its sales. Just ahead, we could expect profitability to dip slightly in the coming months as Nvidia completes the production ramp of Blackwell. Nvidia's gross margin has been in the mid-70% range in recent times but will fall to the low-70% range, the company predicts. Even this level is pretty amazing, especially considering the complexity of the Blackwell rollout. Blackwell is an architecture that can be tailored to the needs of each customer, with seven different chips, various networking options, and other customizable details. Organizing the production ramp of such a system and serving the needs of major tech company customers is Nvidia's priority right now -- and this along with the costs of putting these logistics into place will weigh on the profitability of each sale. So, we shouldn't expect maximum profitability right out of the gate. But here's the good news. Nvidia already is predicting gross margin will return to the mid-70% range, possibly in the second half of next year. That means we can expect Nvidia to maintain its high level of profitability. At the same time, demand suggests revenue, too, should continue to climb. So, yes, we should expect a modest dip in profitability in the coming months as Nvidia ramps production of Blackwell, but this looks like a temporary situation. Over the long term, Nvidia is on track to keep up the momentum we've seen in recent quarters as customers pour investment into their AI platforms. Today's $200 billion AI market is forecast to reach $1 trillion by the end of the decade, another positive sign for this AI leader. All of this means that investors shouldn't focus too much on the short term and instead should consider Nvidia's long-term prospects. And Nvidia's profitability track record and forecasts for gross margin to come are reasons to be optimistic.

2 Monster Stocks to Buy Before 2025 | The Motley Fool

With 2024 coming to an end, many investors may be keen to readjust their investment portfolios to secure higher returns for 2025. Since artificial intelligence (AI) continues to be a red-hot investment theme on Wall Street, investors can consider purchasing small stakes in fundamentally strong, high-quality AI-powered stocks. Against this backdrop, here's why stocks such as Nvidia (NVDA 2.15%) and Amazon (AMZN 1.04%) may prove to be attractive picks ahead of the new year. Nvidia continued its run of stellar performance with its third quarter of fiscal 2025 (ended Oct. 27, 2024) earnings report, with revenues and earnings handily beating consensus estimates. Unsurprisingly, AI continues to be the most important growth catalyst for Nvidia, which positioned itself as a data center scale end-to-end AI infrastructure company. Nvidia's Hopper architecture chips are still in high demand from cloud service providers, consumer internet companies, and enterprises building and running next-generation AI models. The recently launched H200 GPU (successor to the widely acclaimed H100 GPU) saw sales rising to double-digit billions in the third quarter, becoming the fastest product ramp-up in the company's history. Nvidia's next-generation Blackwell architecture GPUs are also seeing strong momentum, with 13,000 GPU samples already shipped to customers. With demand for Blackwell GPUs far outpacing supply for several upcoming quarters, Nvidia will enjoy significant pricing power -- especially since its chips are technologically superior to its competitors. Subsequently, the company expects to exceed its previous Blackwell revenue outlook of several billion dollars for fiscal 2025. Going beyond AI-optimized chips, Nvidia is already witnessing solid adoption of its cloud-native Enterprise AI software suite, which includes a range of microservices for generative AI development, application deployment across environments, and technology support. Many industry leaders are using the Enterprise AI platform as an operating platform of choice for building AI agents and CoPilots. Enterprise AI can emerge as a major growth driver for Nvidia in the coming years, as billions of agents are expected be deployed. Furthermore, Nvidia also expects Industrial AI and robotics to become potent growth opportunities. With enterprises keen on designing and simulating complex physical environments to increase productivity and efficiency, Nvidia Omniverse (a real-time 3D collaboration and simulation platform) stands to benefit dramatically in the coming years. While Nvidia's technological prowess is undeniable, many investors seemed to be spooked by its high valuation multiples. However, the company's robust growth prospects seem to justify its valuation. Nvidia is currently trading at price-to-earnings (P/E) multiple of 54.4 times, far lower than its five-year average P/E multiple of 75.7 times. The company's price/earnings-to-growth (PEG) ratio of 0.24 times is also far lower than 1. Hence, considering the solid AI-powered tailwinds and robust financial health, I believe that Nvidia can be a smart pick for long-term investors. Amazon also surpassed top-line and bottom-line expectations in its third quarter 2024 (ending Sept. 30, 2024) results. While the company showed broad-based growth across all businesses, Amazon Web Services (AWS) and advertising segments outshined the rest. As the leading global cloud infrastructure player with 31% market share, AWS continues to benefit from companies modernizing their IT infrastructure and moving from on-premise environment to the cloud. The cloud computing business is also a beneficiary of the increasing enterprise adoption of generative AI technologies at scale. Generative AI technologies have a higher probability of being more successful and competitive if the enterprise data is in the cloud. Furthermore, to attract customers, AWS released almost twice the number of generative AI and machine learning features as compared to competitors in the past 18 months. AWS revenues grew by 19.1% from a year ago to $27.5 billion in the third quarter. The cloud computing business's operating income grew by $3.5 billion to $10.4 billion. AWS has reached an annualized revenue run rate of $110 billion, with significant reacceleration in the last four quarters. AWS' AI business is growing even faster and has already reached a multibillion-dollar revenue run rate. It is growing at a triple-digit year-over-year percentage, almost three times faster than AWS in its early growth stages. Advertising revenues grew 18.8% year over year to $14.3 billion in the third quarter. The business is also proving a major contributor to the company's overall profitability. Thanks to Amazon's expansive reach across products, services, geographies, and demographics, the company has been successful in offering full-funnel advertising services at scale. Amazon engages with and measures outcomes for customers at every stage of the purchase journey, making it an attractive advertising platform for all types of brands. It has also launched several generative AI-powered creative tools to help advertisers design and create engaging and relevant advertisements. Amazon's Sponsored Products advertisements on its e-commerce platform have continued to show meaningful growth. Furthermore, the company is also generating a new revenue stream with advertising on Prime Video. With a strong financial backdrop, ongoing leadership in cloud computing, advancements in AI, and increasing strength in digital advertising, Amazon positioned for strong gains in 2025.

Nvidia's Growing Faster Than You Think. This Table Proves It. | The Motley Fool

Like clockwork, Nvidia (NVDA 2.15%) delivered another round of explosive growth in its third-quarter earnings report, but investors seemed to be missing the most impressive part of the performance. The company didn't mention it in the earnings call or press release, consigning it instead to the "CFO Commentary" section of its earnings report. By now, most investors know that the data center segment is driving Nvidia's growth. While Nvidia's business spans everything from gaming to autonomous vehicles to visualization tools like the Omniverse, its success in the data center business, driven by the explosive growth of AI, has stolen the narrative and now makes up the vast majority of Nvidia's revenue. While overall revenue in the fiscal 2025 third quarter jumped 94% from a year ago to $35.1 billion, growth in the data center segment was even stronger, climbing 112% from a year ago to $30.8 billion. However, Nvidia breaks down its data center revenue into two categories. It brings in revenue from "networking" and "compute." Compute refers to the components that run applications on a server, such as processors and memory chips. Networking includes components like switches and routers that provides the connectivity and the security needed for the applications to run. AI training and inference is driven by the compute components so it makes sense that compute makes up the bulk of that revenue. Data center networking revenue in the third quarter grew just 20% year over year to $3.1 billion, while data center compute revenue was up 132% to $27.6 billion. The data center compute figure looks like the best reflection of the underlying growth in Nvidia's business, even with the discrepancy between demand and supply as the company said several times on the earnings call that the business is supply constrained and it expects those constraints to continue for the next several quarters, especially on the Blackwell platform. Data center compute revenue also grew 22% sequentially, above 17% overall sequential growth for the whole company. and 17% sequential growth in the data center. The chart below shows the performance in data center compute revenue over the last several quarters. Source: Nvidia filings. (Note: compute revenue was not reported in fiscal 2024) The data center compute platform is at the core of Nvidia's AI offering. It accelerates the most compute-intensive workloads, and it includes a wide range of products such as APIs, software development kits (SDKs), its DGX Cloud, which is an AI training-as-a-service platform, and GPUs, DPUs, and AI enterprise software. All of that makes it very difficult to compete with Nvidia and helps explain why the data center business is growing so fast. The other telling data point in the table above is that while Nvidia's year-over-year revenue growth in the data center compute segment continued to decelerate, sequential revenue growth, which is arguably a better barometer of growth, accelerated from 17% to 22%, lifting a similar acceleration in overall revenue from 15% to 17%. Sequential growth of 22% would translate to a 122% year-over-year growth rate if the business grew at that pace over four quarters. Given the launch of the new Blackwell platform and management's commentary about demand outstripping supply for the next several quarters, the company could maintain a growth rate similar to that over the next year. Nvidia stock fell slightly on the earnings report. Investors seemed to think guidance was underwhelming as the company called for year-over-year revenue growth to slow to 70% in the fourth quarter, with the top line reaching $37.5 billion, plus or minus 2%. However, Nvidia has a long history of topping its guidance, and it looks like a good bet to do so again in the fourth quarter, given the scorching growth from the data center compute business and locked-in demand for its Blackwell platform. Don't be surprised to see Nvidia top that forecast again three months from now. The business is on fire. It continues to deliver stellar results, and there's little in the way to slow it down.

Nvidia's Journey To The Top With $3.5 Trillion Market Capitalization: How The AI Chip Giant Transformed Post-COVID - NVIDIA (NASDAQ:NVDA)

Nvidia Corp. NVDA, under CEO Jensen Huang, has reached a staggering $3.53 trillion market capitalization today, establishing itself as a leader in gaming, data centers, and artificial intelligence (AI). Let's explore how Nvidia evolved from its pre-pandemic foundation to become a dominant force in the post-COVID tech landscape. Pre-COVID: Building A Strong Foundation Before the pandemic, Nvidia was already a major player in the technology sector, thanks to its dominance in graphics processing units (GPUs). Its GeForce GPUs were the gold standard for gamers. At the same time, Nvidia began expanding its data center footprint with products like the A100 GPUs, laying the groundwork for its eventual pivot to AI and high-performance computing. Financially, Nvidia's performance in 2020 reflected the challenges of the pre-COVID market. The company reported $10.92 billion in revenue, a 7% decline from the previous year. Nvidia's stock price saw a remarkable 119% increase in 2020, closing the year at $13.02 per share. Nvidia also launched its Turing and Ampere architectures, which introduced capabilities like real-time ray tracing and enhanced AI processing. But the real game-changer would prove to be its $7 billion purchase of Mellanox Technologies in 2020, marking Nvidia's move into high-performance computing and networking solutions. See Also: Nvidia Blackwell Supplier Vishay Intertechnology Likey To See Upside Courtesy Of AI Frenzy: Analyst Navigating COVID-19: Challenges And Strategic Adjustments Global supply chain disruptions and an unprecedented surge in demand for GPUs exposed vulnerabilities in Nvidia's production capabilities. At the time, the company's CFO, Colette Kress, acknowledged that supply chain constraints were a persistent issue, particularly during the cryptocurrency mining boom and the launch of the GeForce RTX 30 Series GPUs. Nvidia responded to these challenges by collaborating with manufacturing partners to increase production. The company also prioritized the production of chips for AI and data center applications, seizing the opportunity presented by rising AI demand. Post-COVID Growth: Accelerating Through The AI Revolution The launch of its Ampere architecture in 2020 was a turning point, enabling Nvidia to capture the growing demand for AI-driven technologies. It also acquired Cumulus Networks to strengthen its networking capabilities. Nvidia's investments in AI extended to healthcare, with the $100 million Cambridge-1 supercomputer project in the U.K., which supported advanced medical research. These moves reflected a shift in Nvidia's priorities, as the company embraced AI and data centers as core growth drivers. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Technological Breakthroughs And Market Leadership Nvidia's dominance in AI and computing was further solidified with the 2024 launch of its Blackwell microarchitecture. The company also expanded its capabilities in generative AI through partnerships, such as its collaboration with Getty Images in 2023 to develop a new AI tool. By 2024, Nvidia introduced NVLM 1.0, a family of large language models that underscored its leadership in AI innovation. Nvidia's GPUs also became indispensable for companies like Oracle and Tesla, which were reportedly competing for access to its H100 chips. Milestones And Market Impact In 2023, the company's valuation crossed $1 trillion. By June 2024, Nvidia reached the $3 trillion mark. Currently, its market cap stands at $3.53 trillion. Earlier this month, Nvidia reported third-quarter revenue of $35.1 billion, marking a 94% year-over-year increase and surpassing the Street consensus estimate of $33.12 billion, according to Benzinga Pro. Nvidia projected its fourth-quarter revenue to be approximately $37.5 billion, with a margin of plus or minus 2%. Price Action: Nvidia's stock rose 0.66% on Tuesday, closing at $136.91. Year-to-date, Nvidia shares have surged an impressive 184.24%, significantly outperforming the Nasdaq 100 index's 26.47% gain over the same period. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: As Nvidia Maintains Chip Supremacy, Jim Cramer Says Foes Of Semiconductor Giant 'Aren't Really Enemies' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Nvidia Market News and Data brought to you by Benzinga APIs

Nvidia's Latest Record Quarter Show Its AI Dominance Remains Intact - NVIDIA (NASDAQ:NVDA)

Last week, Nvidia Corporation NVDA issued its third quarter results, topping both sales and earnings estimates as well as posting a better-than-expected current quarter guidance as its end-customers, including Microsoft Corporation MSFT, Open AI and Oracle Corporation ORCL, have started receiving its next-generation AI chip, the mighty Blackwell, that is now in full production. Third Quarter Highlights For the quarter ended on October 27th, Nvidia reported its revenue surged 94% YoY to $35.08 billion, surpassing LSEG's estimate of $33.16 billion. But, this is a quarterly slowdown as sales rose 122%, 262%, and 265% during previous quarters respectively. The date center business that is at the heart of the AI hype brought in $30.8 billion with sales rising 112% YoY and surpassing StreetAccount's estimate of $28.82 billion. But not all of that revenue is made of chips that power AI development as $3.1 billion of that sales figure was brought in by networking parts. Gaming business brought $3.28 billion to the revenue table. While automotive and professional visualization businesses remain much smaller, automotive sales grew 72% YoY to $449 million while the later reported 17% YoY growth, bringing in sales of $486 million. Net income more than doubled from last year's comparable quarter as it amounted to $19.3 billion. While net income jumped from last year's 37 cents per share to 70 cents per share, adjusted earnings per share amounted to 81 cents, also topping LSEG's estimate of 75 cents. Due to selling more chips, gross margin expanded to 73.5%. Fourth Quarter Outlook Nvidia guided for current quarter sales of about $37.5 billion plus or minus 2%. Outlook implies YoY growth of about 70%, which is a slowdown from last year's comparable quarter when growth amounted to 265%. Nvidia's AI dominance remains intact. It's a well-known fact that Nvidia is a primary beneficiary of the ongoing AI hype, with shares nearly tripling year to date. Blackwell shipments are in for a ramp up next year, but already in the current quarter, Nvidia is in "several billion dollars" of Blackwell revenue. Demand for Blackwell is expected to exceed supply for several quarters in the next fiscal year. Now for how long can Nvidia's AI dominance continue to soar is a different question only time is able to answer. DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice. This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy. Market News and Data brought to you by Benzinga APIs