Nvidia's Blackwell Launch: A Potential Game-Changer in the AI Chip Market

Where Will Nvidia Be 6 Months After the Blackwell Launch? Here's What History Says. | The Motley Fool

Nvidia's revenue has soared in the triple digits in recent quarters. Nvidia (NVDA 0.80%) may be heading for its biggest moment yet. The artificial intelligence (AI) chip giant is getting ready to launch its new architecture, one that could be a game changer for the industry considering the number of innovative features included in the platform. Nvidia aims to ramp production of the Blackwell architecture and chip in the fourth quarter. This comes at a key moment for the technology company. Nvidia has built an AI empire over the past few years and grown revenue in the triple digits quarter after quarter. Now, though, as the company's revenue levels reach extremely high points, triple-digit gains may not be sustainable. And rivals have also produced chips they hope can take market share. So, it's logical to ask this question: Where will Nvidia be six months after the Blackwell launch? Let's consider what history has to say -- and a few other clues -- and find out. First, a quick summary of Nvidia's path so far and what to expect from the Blackwell launch. Nvidia has built dominance in the AI market by designing the most powerful chips and an entire platform of products and services to accompany them. So, customers can go to Nvidia simply for the chips, known as graphics processing units (GPUs), or they can get in on the entire Nvidia stack to run their data centers. This has helped the company grow its quarterly revenue to a record $30 billion and gross margin to levels above 70%. Nvidia also has increased net income in the triple digits, reporting profit of more than $16 billion in the recent quarter. Investors now are eagerly awaiting the Blackwell launch with high hopes thanks to the architecture's six game-changing innovations -- from Nvidia's best chip yet to a high-performance preventative maintenance system to ensure system uptime and a fifth-generation NVLink to deliver high-speed communication among up to 576 GPUs. As mentioned, Nvidia plans on ramping production of Blackwell in the coming weeks, and in Nvidia's most recent earnings report, chief executive officer Jensen Huang offered us clues about customer interest in this new product. Huang said demand has surpassed supply, and he expects this to continue into next year. More recently, in an interview with CNBC, Huang reconfirmed this, calling demand for Blackwell "insane." All of this prompted Nvidia to forecast billions of dollars in Blackwell revenue in the fourth quarter. So Blackwell won't take long to start adding significantly to Nvidia's top line. On top of this, Nvidia predicts gross margin in the mid-70% range for the full year, showing us the company is capable of launching this major product while still maintaining an extremely high level of profitability. Now let's talk about where Nvidia may be six months after launch. History offers us an initial clue, showing us that in the six months following Nvidia's last release of a new architecture -- Hopper, back in 2022 -- the stock soared nearly 100%. A look at Nvidia's earnings report for the period ending April 30, 2023, about six months after the Hopper launch, shows us that demand for the platform along with related products was surging. And Nvidia reported record data center revenue during the quarter. So, history offers us reason to be confident about Nvidia's position six months after the upcoming Blackwell launch. And a couple of other elements also make me optimistic about the period ahead. Nvidia, as it streamlines the Blackwell production process and gets past the initial launch expenses, may be able to increase margins. This may not be as early as six months post launch, but that's OK. Since gross margin already is extremely high at more than 70%, any better than this further down the road is like icing on the cake. Nvidia doesn't release the percentage of revenue it generates from specific customers, but analyst and news reports suggest the company's biggest customers are Microsoft, Meta Platforms, Amazon, and Alphabet. This is positive, because these players all have the resources to continue boosting their investments as the AI boom progresses. On top of this, recent anecdotes show just how eager market giants are to get in on Nvidia products. Oracle co-founder Larry Ellison recently said he and Tesla chief Elon Musk "begged" Nvidia for more chips. This suggests that even as competitors release new chips, industry powerhouses still flock to Nvidia first. Of course, as mentioned above, Nvidia may not report triple-digit growth every quarter as it's done recently. So, six months after the Blackwell launch, we could be looking at a slower growth rate than the one Nvidia has delivered in the past. But this is because Nvidia already has increased its revenue to mind-blowing levels, making it difficult to keep gaining at such a pace. So, a slowdown shouldn't be seen as negative. All of this means that, six months after the Blackwell launch, Nvidia still may be racing to catch up with enormous demand -- but the company also might report billion-dollar revenue from the platform and solid earnings growth. This also could translate into fantastic stock performance. But even if the shares don't rise as they did following the Hopper launch, Nvidia is well positioned to score a win for investors over the long term.

Should You Buy Nvidia Before Nov. 20? Here's What History Says. | The Motley Fool

Nvidia (NVDA 0.80%) has established itself as a successful investment over time, climbing more than 2,700% over the past five years. And momentum has strengthened as this top chip designer reported quarter after quarter of triple-digit earnings growth. This is thanks to the dominance Nvidia has built in the artificial intelligence (AI) chip market, with the company now holding about 80% share. And Nvidia isn't only winning in AI chips but in the entire AI market, which is forecast to grow from $200 billion today to $1 trillion by the end of the decade. This is because Nvidia offers a wide variety of products and services to suit any company developing an AI platform. Speaking on a BG2 podcast earlier this month, CEO Jensen Huang referred to the company as the "on ramp" to the AI world. Next up for Nvidia is the company's third-quarter earnings report, scheduled for Nov. 20. Investors will focus on earnings figures, the ability of Nvidia to meet its gross margin goal, and comments about an important upcoming product launch. Should you buy Nvidia stock before this key report? Let's take a look at what history has to say. First, let's consider what investors are expecting from the tech giant. Nvidia has forecast double-digit revenue growth, slower than the recent triple-digit growth. But it's important to keep in mind that comparison quarters are getting tougher, with Nvidia's last third quarter already bringing in more revenue than the company made in an entire year just a few years ago -- back in fiscal 2021. So double-digit growth should still be considered extremely strong performance at this stage of the Nvidia story. The company, which last quarter reported gross margin of 75%, aims to maintain the greater than 70% margin level. It's forecast gross margin in the mid-70% range for the third quarter and the full year. This level of profitability along with double-digit revenue growth should reinforce investors' confidence in this top tech player. Finally, investors will be looking for comments about the upcoming launch of Nvidia's Blackwell architecture and best-performing chip ever. So far, so good -- with Nvidia's Huang saying on the latest earnings call that demand surpassed supply and that should continue into next year. Now, let's consider how Nvidia's stock may react to the Nov. 20 earnings report. And one way to do that is to look at historical trends for Nvidia following these reports. Looking back at the past eight quarters, Nvidia stock rose on six of those occasions in the one-month period following the report. And four of those times, the stock posted double-digit gains. It's important to note that stocks don't always follow historical trends, so even though these findings suggest Nvidia may rise if the company delivers positive news, it's not guaranteed. It's impossible to predict short-term stock performance as stocks and the market have been known to surprise us. So now let's get back to our question. Should you buy Nvidia before Nov. 20? Historical trends offer us reason to be optimistic about a near-term gain, but more importantly, investors should consider Nvidia's potential for performance over the long term. The trend of revenue growth and solid gross margin could continue well into the future, and here's why. Nvidia already is a leader, with customers ready to wait to get their hands on the latest product, and the company has pledged to innovate on an annual basis. On top of this, Nvidia is set to gain in efficiency as the company moves past the early production and launch stages for Blackwell and processes become more of a routine. This should help Nvidia maintain its wide margins. All of this means if you buy before Nov. 20 and benefit from an increase -- fantastic. But if the stock stagnates or slips after the report or if you buy Nvidia at a later date and miss out on a post-earnings rally, don't worry. Near-term movements won't have much impact on your returns over time. So, Nvidia makes a great buy for investors before or after Nov. 20 because the company has what it takes to excel over the long term.

Should You Buy Nvidia Before or After the Blackwell Launch? | The Motley Fool

The moment many tech investors have been waiting for is just around the corner. Nvidia (NVDA -2.81%) plans on launching its potentially game-changing Blackwell architecture in the weeks to come. Blackwell includes the most powerful chip ever along with five other major innovations, and investors have been closely watching the development and launch timeline. Meanwhile, even as it plans this big launch, demand for Nvidia's current architecture, Hopper, has continued to soar. And the tech giant has delivered excellent earnings results with profit and revenue climbing in the triple digits quarter after quarter. The stock has soared 190% so far this year, but valuation actually remains reasonable considering the company's leadership in the market and long-term prospects. So, Nvidia looks like a buy -- but should you make the move before or after the Blackwell launch? Let's find out. First, let's summarize the initial chapters of this exciting story that has unfolded over the past several years. Nvidia built a solid position as a seller of graphics processing units (GPUs) to the gaming market -- but it soon became clear that these powerful chips with the ability to process multiple tasks simultaneously could be useful in many other industries too. The company developed the CUDA parallel computing platform to make this happen, and as the artificial intelligence (AI) boom accelerated, Nvidia began generating more and more sales from AI customers. Today, though video game revenue still is growing, Nvidia generates the lion's share of growth and revenue from its data center business -- the unit that includes its AI products and services. Now, let's consider the introduction of Blackwell. Nvidia says it aims to ramp up Blackwell production in the fourth quarter and even generate several billions of dollars of Blackwell revenue during the period. Demand has surpassed supply, and the company sees this as continuing well into next year. At the same time, as mentioned, customers continue to order Hopper too -- Nvidia says all of its systems work together, and the company develops new algorithms on a regular basis to improve its already existing products. This means if you already are working with Nvidia, you don't have to worry about your current system becoming obsolete just because new products and services are launching. All of this keeps demand growing for current and future products. Nvidia's earnings strength has helped the stock to climb 2,800% over the past five years, and today the stock trades for 50 times forward earnings estimates -- this isn't ridiculously expensive considering Nvidia's leadership in the high-growth field of AI and its focus on innovation. Now, let's get back to our question. Should you buy Nvidia today or after the Blackwell launch? As mentioned earlier, Nvidia's earnings have climbed in the triple digits in recent times, but the company is forecasting double-digit growth for the third quarter. That report is set for Nov. 20. Before looking at this as a slowdown, it's important to note that quarterly comparisons are getting tougher and tougher for Nvidia -- because quarterly revenue as of last year reached extremely high levels. So double-digit growth from those levels would be fantastic. And if Nvidia meets or beats expectations and offers more positive commentary about the Blackwell launch, the stock could climb. That said, considering the stock's gains this year and in recent years, even fantastic news may not result in explosive share performance overnight. We might see waves of increases here and there during the Blackwell launch or even a bit later -- investors may wait to hear about the sales levels in the fourth quarter report. All of this means it won't matter much if you buy Nvidia before or after the Blackwell launch, and this is especially true if you hold onto the stock for the long term. Near-term movement won't make much of a mark on your five or 10-year returns. So you can go ahead and buy Nvidia now or wait until after the Blackwell launch, and thanks to the company's great prospects, in either case you may score a win over the long haul.

Where Will Nvidia Stock Be in 5 Years? | The Motley Fool

The iconic chipmaker is once again testing its all-time highs. With shares up by 2,800% since 2019, Nvidia (NVDA -0.08%) demonstrates the life-changing potential of long-term investing. An investor who purchased just $1,000 worth of the stock back then would have $28,000 today. That said, past performance is no guarantee of future returns. Let's dig deeper to see if the iconic chipmaker still has millionaire-maker potential over the next five years and beyond. In the weeks after Nvidia reported better-than-expected second-quarter (ended July 28) earnings on Aug. 28, there was a bit of a disconnect between the company's stock price and its performance. The market didn't seem particularly impressed, even after the chipmaker's revenue jumped 122% year over year to $30 billion and profits soared 168% to $16.6 billion. However, management used its three-day AI Summit, which ran from Oct. 7 to Oct. 9, as an opportunity to stoke optimism about its hardware business. At the conference, CEO Jensen Huang introduced exciting new use cases for the technology, including "physical AI," which are autonomous robots interacting in the real world. But beyond grandiose projections, investors have something tangible to get excited about --Nvidia's new Blackwell-based artificial intelligence chip infrastructure. This next-generation AI hardware could reduce the inference (training) costs of large language models (LLMs) by up to 25 times compared to older chips. This is a significant technological improvement, and demand is so heavy that the chips are already sold out for the next 12 months. For cloud giants, the play is simple: Buy as many AI chips as possible to offer advanced computing power to clients and prevent them from getting into the hands of rivals. As Alphabet's CEO, Sundar Pichai, put it: "The risk of underinvesting is dramatically greater than the risk of overinvesting." And he isn't the only executive with this perspective. Social media giant Meta Platforms is also going all-in on AI hardware, with its management expecting to spend $35 billion to $40 billion this year in capital expenditures, with much of that dedicated to data center infrastructure supplied by Nvidia. However, unlike Alphabet, Meta doesn't have a cloud business, where it could ostensibly justify this level of spending with potential revenue. Furthermore, its flagship LLM, Llama, is free and open-source, meaning it isn't designed to generate profit. Meta is spending billions on experimental infrastructure that it doesn't plan to monetize. And this should raise alarm bells about the sustainability of demand for Nvidia's hardware. The situation is reminiscent of the metaverse, Meta's last big gamble where CEO Mark Zuckerberg invested $46.5 billion in the virtual reality concept, with practically nothing to show for it. Shareholders generally want to see profits, not speculation. And eventually, major Nvidia clients like Meta could face pressure to scale back their arguably reckless AI investments. With a relatively low valuation (the stock trades for 35 times forward earnings) and new Blackwell-based AI chips poised to supercharge top-line growth, Nvidia has everything it needs to unlock another bull run -- and possibly mint even more millionaires in the process. But how much longer can the speculative AI industry boom without the real-world results to justify all this capital investment? Long-term investors may want to look for more evidence that the consumer-facing software side of generative AI is pulling its weight before considering a position in Nvidia's stock. The new rally is certainly tempting, but there is potential for a significant correction if cloud and data center providers decide AI tech is no longer a strategic focus.

Nvidia Stock Could Soar Another 38%, According to 1 Wall Street Firm | The Motley Fool

One Wall Street firm has significantly bumped its price target on Nvidia stock. Nvidia (NVDA 0.80%) has been in scintillating form on the stock market in 2024, reaching gains of nearly 180% as of this writing. This is due to the robust growth that the company has been clocking in recent quarters on account of the strong demand for its graphics cards deployed in artificial intelligence (AI) servers. The stock's median 12-month price target of $150 -- as per 64 analysts who cover Nvidia -- indicates that there isn't much upside on offer as it points toward gains of just 9% from current levels. However, Bank of America recently raised their price target on Nvidia from $165 to $190, which would translate into a 38% gain from current levels. Let's see why that was the case and check if this high-flying semiconductor stock could rise above consensus estimates and deliver stronger gains going forward. Bank of America analysts have raised their price target on Nvidia because of the company's dominant position in the AI chip market. They believe that the chipmaker could continue commanding an estimated 80% to 85% share of this space, which puts the company in a terrific position to capitalize on a $400 billion market opportunity. Bank of America's bullishness also stems from the arrival of Nvidia's new generation of Blackwell processors, as well as a terrific earnings report from key supplier TSMC and Nvidia CEO Jensen Huang's claim that the demand for its upcoming Blackwell cards is "insane." It is worth noting that Nvidia management pointed out on the company's August earnings-conference call that it is on track to sell several billion dollars' worth of Blackwell processors in the fourth quarter of the current fiscal year. More importantly, the demand for Blackwell chips is expected to be higher than their supply in 2025. That won't be surprising as multiple cloud-computing giants are in line to deploy Nvidia's Blackwell processors. In March this year, Nvidia management pointed out that Amazon Web Services, Dell Technologies, Google, Meta, Microsoft, OpenAI, Oracle, Tesla, and xAI are among the many companies expected to adopt the Blackwell platform. That's not surprising considering the huge leap in performance that Nvidia's Blackwell platform is expected to deliver as compared to the prior-generation Hopper chips. More specifically, Nvidia is promising a 4 times increase in AI training performance and a 30 times jump in AI inference as compared to Hopper. Even better, Nvidia claims that Blackwell can train large language models (LLMs) at "up to 25x less cost and energy consumption than its predecessor." Moreover, Nvidia is set to extend its technology lead in the AI chip market with the arrival of Blackwell. That's why it won't be surprising to see the company maintaining a strong share of the AI chip market as Bank of America analysts predict. This should ideally pave the way for robust long-term growth for Nvidia. Bank of America forecasts that the size of the AI accelerator market could jump to $280 billion in 2027 before heading north of $400 billion in the longer run. Nvidia has generated almost $49 billion in revenue from its data-center business this year. Of that, $42 billion is from sales of compute chips such as AI graphics cards, while the remaining was from sales of its networking solutions. At this pace, Nvidia could end fiscal 2025 (which will end in January 2025) with $84 billion in revenue from sales of its AI accelerators. Assuming Nvidia controls even 75% of the AI accelerator market in 2027 (which will coincide with its fiscal 2028), it could generate $210 billion in revenue from this space (based on BofA's $280 billion market-size estimate). That would be a huge jump from the AI accelerator revenue that Nvidia is set to report in the current fiscal year. Throw in the potential revenue that Nvidia could generate from sales of its AI networking chips over the next five years, and there is a solid possibility of the company's top line exceeding analysts' expectations. At the same time, the $400 billion long-term revenue opportunity in AI chips suggests that there may be more room for Nvidia to grow its AI revenue in the future. All this explains why analysts are expecting Nvidia's bottom line to increase at an impressive annual rate of 57% for the next five years. The market could reward such solid earnings growth with more stock upside both in the short and the long run. As such, this AI stock seems well placed to approach Bank of America's updated price target before heading higher in the future. That's why investors looking to add an AI stock to their portfolios would do well to buy Nvidia since it is trading at an attractive 35 times forward earnings right now, which is not all that expensive considering that the Nasdaq-100 index has a forward-earnings multiple of 30 (using the index as a proxy for tech stocks).

Is Nvidia Stock a Buy Now? | The Motley Fool

The stock continues to look like a strong long-term investment. With its stock up nearly 190% year to date and up nearly 2,830% in the past five years, investors may be wondering if Nvidia (NVDA -2.81%) is still a buy right now after these huge gains. The gains have powered it to become the second-largest company in the world by market cap. Nvidia has clearly been riding the artificial intelligence (AI) wave, but here are four reasons the stock still looks like a buy today even after its strong performance. The biggest bull case for Nvidia is that despite the insane demand the company has been seeing for its graphics processing units (GPUs) to help create AI infrastructure, it appears the AI buildout is still in the early innings of what is expected to be a long game. Major tech companies and well-funded AI start-ups, such as OpenAI and Elon Musk's xAI, have been pouring money into building AI-focused data centers to help train large language models (LLMs) and run AI inference. This can be seen in the rising capital expenditure (capex) budgets of major tech companies and management's comments about future spending. For example, Alphabet and Meta Platforms have both indicated that the biggest risk with their AI spending is not overspending but underinvesting, while Oracle has said it sees no end in sight for AI infrastructure spending over the next five to 10 years. Meanwhile, Microsoft's finance leases that have been contracted out but not commenced (by and large for AI data centers) have more than tripled in the past year to a whopping $108.4 billion. AI models need exponentially more computing power to train as they advance and become more sophisticated. For example, Alphabet has said its Llama 4 LLM would need up to 10 times the computing power as its prior version, while xAI's Grok 3 used five times as many GPUs to train as Grok 2. All of this points to the increasing need for GPUs, the area in which Nvidia has become the dominant leader. While the need for GPUs looks like it will continue unabated, Nvidia isn't the only company that can produce AI chips. Advanced Micro Devices also makes GPUs, while a few companies, such as Broadcom, help companies develop custom AI chips for their specific needs. However, Nvidia has become the clear leader in the space with an over 80% market share. This comes not only from its strong chip offering but also the wide moat it has been able to create in the space through its CUDA software. Long before the AI frenzy, Nvidia created its CUDA platform to help developers program its GPUs using software that it gave away for free. As a result, CUDA became the standard program upon which developers in the industry learned to program these chips. As the de facto industry standard, it has made it more difficult for other companies to break into the space and take meaningful market share. At the same time, Nvidia has recently sped up the development of its chips from a two-year iteration cycle to a one-year cycle. This should help keep it in the technological lead, as well as continue to give it pricing power, as it will consistently be able to offer new and improved designs. The company only just recently began shipping chips based on its Blackwell architecture, but it's already set to introduce new chips based on its Rubin architecture in 2026. At this point, there doesn't appear to be any big threat to Nvidia losing any meaningful market share. Despite Nvidia's huge stock price run over the last few years, the stock is still attractively valued given the opportunities in front of it. It trades at a forward price-to-earnings (P/E) ratio of about 35 based on 2025 analyst estimates, and a price/earnings-to-growth (PEG) ratio of just over 0.9. A PEG under 1 is generally viewed as undervalued, and growth stocks will often have PEGs well above 1. As such, Nvidia still has a huge AI opportunity ahead and a wide moat -- and it also trades at a very reasonable valuation. With a market cap of over $3 trillion, investors may be worried about how much bigger Nvidia can get. However, being one of the largest companies in the world does not mean its stock can still not outperform over the next decade. For example, Apple was the largest company in the world around 10 years ago with a market cap of about $500 million at the start of 2014. A little over 10 years later it is still the largest company in the world, but with a market cap of over $3.5 trillion. That's a 7x increase in 10 years. Another example is that Microsoft was the largest tech company at the start of 2010 with a market cap of just under $268.56 billion. Ten years later (in 2020) it was the second-largest tech company with a market cap of $1.2 trillion, a nearly 4.5x increase. Nvidia's current huge size does not preclude its stock from going significantly higher in the years ahead, especially with the right tech trend pushing its growth.

Why 1 Top Wall Street Analyst Thinks Investing in Nvidia Stock Now Is a "Generational Opportunity" | The Motley Fool

Nvidia could become bigger than Apple if Bank of America is right. When will Nvidia (NVDA 4.14%) run out of steam? The stock has skyrocketed more than 11x over the last two years. That's the kind of momentum that longtime investors would tell you can't continue indefinitely. But anyone who thought Nvidia had finally faced its day of reckoning earlier this year has already been proven wrong: The stock fell more than 20% below its high two times in the second half of 2024, only to bounce back. Even better days might be ahead. Here's why one top Wall Street analyst thinks investing in Nvidia stock now is a "generational opportunity." If you guessed this huge opportunity for Nvidia relates to artificial intelligence (AI), you're right. Technically, Bank of America analysts led by Vivek Arya used the phrase "generational opportunity" to describe what lies ahead for Nvidia in AI accelerators -- chips used to speed up the performance of AI tasks. However, this massive opportunity for Nvidia also presents an equally great opportunity for investors. Nvidia's graphics processing units (GPUs) are the gold standard in accelerating AI applications. The company isn't likely to relinquish its lead anytime soon, especially with its super-powerful Blackwell chips on the way. In 2023, the AI accelerator market totaled around $45 billion. Arya and the other BofA analysts project this market will explode to $280 billion by 2027. They think it could top $400 billion in subsequent years. What will be the key driver of this phenomenal growth? Large language models (LLMs). Bank of America analysts wrote to investors last week: "We continue to see the pace of new model development increase. LLMs in particular are being developed for both larger size and better reasoning capabilities, which both require greater training intensity." Unsurprisingly, Bank of America upped its price target for Nvidia. Its analysts now expect the GPU maker's share price to reach $190 within the next 12 months. That translates to a market cap of roughly $4.7 trillion. The biggest publicly traded company right now is Apple (AAPL 0.63%), which has a market cap of around $3.6 trillion. Nvidia could compete neck-and-neck with Apple on another front, based on BofA's projections. They think Nvidia could rake in $272 billion of AI-related revenue by 2030. Apple recorded iPhone net sales of $200.6 billion in 2023, down 2% year over year. There's no guarantee that Nvidia will be bigger than Apple, though. Apple has its own potential AI catalyst with the launch of its Apple Intelligence generative AI functionality. Some analysts believe these new capabilities could ignite an iPhone upgrade supercycle. Could the Bank of America analysts be wrong about Nvidia? Perhaps. There are several things that could go wrong for the chipmaker. For example, generative AI and LLMs could hit a wall. Some AI experts believe the lack of new training data for AI models could become a serious issue. Although synthetic data created by AI could provide an answer to this problem, it's uncertain if this approach will work well. Nvidia also faces increasing competition. And it's not just from chipmakers such as Advanced Micro Devices. Cloud services giants Amazon, Microsoft, and Google parent Alphabet have their own AI chips as well. A major economic downturn could prevent BofA's predictions about Nvidia from materializing as quickly as its analysts expect. Even large customers could curtail spending on AI if they face significant financial challenges. However, I suspect the chances that Bank of America analysts are right about the generational opportunity for Nvidia are greater than the chance that they're wrong. If so, it could be a long time before this stock truly runs out of steam.

Could Nvidia's 2025 Be as Good as Its 2024? | The Motley Fool

Nvidia (NVDA -0.08%) had another banner year in the market, with its stock rising around 185% so far this year. This comes after 2023's impressive 239% run, so the obvious question is: Can Nvidia do it again in 2025? Nvidia would have to clear many hurdles in order to do it, as another repeat performance of 2023 and 2024 would require unbelievable continued growth. Nvidia's recent success is directly tied to the proliferation of artificial intelligence (AI). Its graphics processing units (GPUs) are the backbone of this movement, providing users with the computing power they need to train AI models. Thousands of GPUs can be connected in clusters to make the machines even more powerful. This benefits Nvidia significantly, as clients aren't just buying one or two -- they're buying thousands. This caused Nvidia's revenue to boom in the past few quarters, repeatedly setting record-high revenue numbers. If Nvidia meets management's revenue guidance for third-quarter fiscal year 2025 (ending around Oct. 31), it will notch another all-time high, with $32.5 billion in revenue expected. This performance has been incredible, but growth is slowing. Once you've reached the size of Nvidia, it's nearly impossible to triple revenue year over year; there just isn't enough money to do it. We're starting to see this deceleration happen, although Nvidia is still growing very quickly. If Nvidia hits management's Q3 revenue goals, its revenue growth will fall to 80% year-over-year growth. That's still impressive growth, but it is slower than what it has put up, which hurts Nvidia's chance of posting a repeat. For the 2026 fiscal year (ending January 2026), Wall Street analysts expect 43% year-over-year revenue growth, which is very impressive considering Nvidia's size, but likely not enough for the stock to triple. There are valuation considerations as well. Nvidia has a premium valuation due to unbelievable product demand and top-tier execution in fulfilling it. As a result, its valuation has reached a high price tag. At 65 times trailing earnings, Nvidia isn't a cheap stock. But it's also wise to consider 2025's metrics since it is growing so fast. When you use 2025's earnings projections (FY 2026 for Nvidia), the price tag falls to 34 times forward earnings. That means if Nvidia hits all of Wall Street's estimates and the stock price stays the same, it will trade at 34 times trailing earnings once it reports fourth-quarter FY 2026 results. Considering that's the high end of what many tech stocks are trading at now, it shows just how expensive Nvidia's stock has become. So, what's a realistic one-year return for Nvidia's stock? I don't know. It's impossible to tell what market sentiment will be and what Nvidia's growth will actually look like. You could use Wall Street analysts' average one-year price target of $154 (indicating 11.5% upside), but that also has a lot of guesswork in it. As long-term investors, we're better off considering the overall picture and making our decisions based on that information. We know that AI demand is just in its early innings, and Nvidia's GPUs are the backbone of this movement. With that in mind, it's clear that demand for its products will last past 2025. However, the stock is priced at a point where it must execute to perfection in order to deliver any returns. Nvidia's stock won't triple in 2025, so it won't have quite the same year as 2024. It would be worth nearly $10 trillion in market cap if it posted a 2024 repeat. However, if AI demand remains strong, I think the stock will put up another market-beating year. Just don't expect it to be unbelievable returns.

Wall Street Sees Nvidia Hitting $5 Trillion by 2026: Could It Happen? | The Motley Fool

But Wall Street doesn't see Nvidia stopping here, with some analysts seeing Nvidia surpassing Apple, and hitting a $5 trillion valuation by 2026. Here are the reasons for Wall Street's optimism, and what could also disrupt the bullish thesis. Nvidia's rise is sure to garner a lot of skeptics. But the bulls have a compelling case that one, the AI revolution is real, and will only grow bigger in the years, and two, that Nvidia will continue to dominate the space, generating not only growth but maintaining its super-high margins. There have been several bullish predictions on both fronts in recent weeks. At its own recent AI event, Advanced Micro Devices (AMD 1.24%) CEO Lisa Su predicted the AI data center chip market will reach $500 billion by 2028, up from just $45 billion in 2023. And recent Wall Street banks discovered that Nvidia's new Blackwell chip is now sold out for the next 12 months. Two Wall Street sell side analysts also just weighed in with very high price targets. Back in June, boutique firm Rosenblatt increased its price target on shares from $140 to $200. That $200 price target is the highest on the street, and just a hair shy of a $5 trillion market cap. Of note, Wall Street analysts usually give price targets based on what they believe the stock will do in the next year. Rosenblatt's analysts upped their target after being encouraged by Nvidia's new Blackwell chip, which is just being shipped now. And the analysts see the demand continuing with the launch of Rubin, which will probably come out at the end of 2025 or beginning of 2026. Of note, Nvidia announced last year it would be increasing the pace of new chip architectures every year, versus a prior two-year cadence. But Nvidia can't just hit $5 trillion by growing earnings; it also has to maintain a high multiple to get there. That's where Rosenblatt sees Nvidia's non-chip offerings helping. Remember, Nvidia isn't just a chip provider, but increasingly a full system solutions provider, providing networking infrastructure and full data center server system reference designs. It also has newer software offerings that help developers use and improve its hardware to specific AI outcomes. Software earnings, with their recurring, subscription-like nature, generally garner a higher valuation that chip earnings, which can be more cyclical. As the AI industry matures, Rosenblatt sees Nvidia's mix of software revenue increasing, keeping its P/E ratio high. Then just last week, Bank of America raised its Nvidia target to $190 from $165. Analyst Vivek Arya boosted his target based on his view that free cash flow margins and growth could sustain not just this year but next year, bringing in over $200 billion over that time. Arya also notes new partnerships with other major enterprise companies such as Accenture can help Nvidia sustain its dominance in the enterprise. The big risks for Nvidia investors are if the two factors mentioned above, AI's benefits and continued investment, as well as its competitive moat, don't hold up. As for the sustainability of the AI revolution, there are virtually no technology executives saying it will slow down. That may only change if the big cloud companies see a lack of returns on their AI spend. But even if a return is delayed, these companies are still likely to continue investing for fear of being left behind. So, it looks as though it would take a serious downturn in their revenues and earnings, likely a recession, for that to happen. But that doesn't look like it's happening with the U.S. economy remaining strong and the low unemployment situation what it is today. More likely is the penetrating of Nvidia's moat and the rise of alternatives to its high-priced chips. To preserve its moat, Nvidia believes its CUDA software, built over the past 15 years, gives it an entrenched advantage. However, there are many big tech companies now getting behind open-source alternatives like Pytorch and Tensorflow, and working on abstracting away the CUDA software kernel so that its programing can be used for other non-Nvidia chips. If the CUDA moat breaks down, then the industry becomes more competitive. With AMD's MI300 line of GPUs becoming more available and virtually all large cloud companies producing more of their own in-house custom accelerators, alternatives to Nvidia are growing, which could lead to pricing pressure. Remember, it's not normal for a chip company to have gross margins in the mid-70% range as Nvidia does today. And it's especially abnormal when those chips are the most expensive in the industry and being bought in biggest numbers. Another risk is that as the industry moves from training at the big cloud players to inference across enterprises, that lower-cost inferencing chips made by Nvidia's competitors may win out. Once a model is trained, custom ASICs and even some CPUs can be utilized for inferencing, especially smaller or medium-sized models. So enterprises will probably tend to go for the best cost-performance for their needs, which may or may not be Nvidia. As many think the inferencing market will dwarf the training market, it's possible alternatives may give Nvidia a run for its money, literally, as business and consumer inferencing applications emerge today and in the years ahead. Given that Nvidia's current valuation implies continued growth and sustained high profits, the industry's pivot to inferencing is another thing to monitor. It's unclear today whether Nvidia will capitalize positively on its current lead, or whether competitors will emerge as the AI revolution evolves to its next inning. The market appears to be bifurcating, to super-high-end training for the race to artificial general intelligence on one hand, where Nvidia is likely to continue its lead, and then to pragmatic everyday inferencing at lower costs on the other. Therefore, investors need to keep abreast of current developments in AI, and be unafraid to adjust one's view as new data points come to light.

Nvidia Market Cap Closing in on $3.5 Trillion: Will It Surpass Apple Soon? | The Motley Fool

Can Nvidia's Blackwell chips propel it past Apple to become the world's most valuable company? $15.7 trillion. That's how much PwC, one of the "big four" accounting firms, believes artificial intelligence (AI) could add to the global economy annually by 2030. That sort of boost doesn't come along very often. The technology has true revolutionary potential that we probably haven't seen since the introduction of the internet. As the company helping drive this AI revolution like no other, Nvidia (NVDA 0.78%) has already captured a significant share of that growing market. Since the AI boom took off in late 2022, the company has added more than $3 trillion in market capitalization, currently sitting just shy of $3.4 trillion and only $190 billion or so from overtaking Apple (currently at $3.57 trillion) as the most valuable company in the world. Can it pull ahead of the iPhone maker? Nvidia's dominance in its industry is due largely to its superior technology. The company's chips are consistently faster and more efficient than what its competitors have to offer, which has led to its control of roughly 90% of the market. It means that last quarter, Nvidia's net income from its AI chip market was roughly 25 times that of its closest competitor, Advanced Micro Devices. Nvidia knows this advantage is fragile, and it must do everything it can to maintain its edge. To do this, it has committed to updating its chips every year (rather than every 2-3 years), which is a tall order to be sure. At present, the company's current Hopper chips are still selling like hotcakes -- Elon Musk ordered 100,000 of them not long ago to build the world's fastest supercomputer -- but Nvidia's new Blackwell chips will begin shipping soon. CEO Jensen Huang says demand for the new chips is "insane," and, according to some reports, they are already sold out for the next 12 months. Nvidia is attempting to expand production, partnering with Foxconn to build the world's largest Blackwell production facility in Mexico. Incredibly, analysts at Morgan Stanley project that Blackwell could bring in $10 billion in added revenue before this year ends. That is much higher than the company's own guidance, so take this forecast with a grain of salt, but it's clear that demand is very strong. We'll see how many chips the company can actually ship. Apple is growing, especially in its services segment, and Wall Street seems relatively bullish. However, reports of less-than-stellar sales of its latest iPhone model are cause for concern. There are indications that sales may have slipped in China, a key market, and at home, the company is banking on its AI integrations -- called Apple Intelligence -- which require a newer iPhone to spur upgrades and boost sales. The jury is still out on whether the changes will be impressive enough for consumers to justify an upgrade. We'll learn a lot in the company's upcoming earnings release later this month. Hopefully, the company has been able to improve its iPhone sales while continuing to take advantage of its service segment, which includes things like Apple TV, Apple Music, and the Apple Store. Given Nvidia's Blackwell roll-out and credible reports of demand echoing the demand from last year that spurred its incredible sales growth, I think Nvidia's share price will rise faster than Apple's, and it will take the lead position in the race for world's largest market cap. However, there is a wrinkle here. The valuations of the two stocks need to be factored in. Take a look at this chart showing the two companies' price-to-earnings ratios (P/E). Nvidia stock trades at quite a premium, and that needs to be kept in mind. With a valuation like that, investors expect major growth. If Nvidia can't maintain its outsized growth rate, its stock price may come back down to earth. So far, it doesn't look like that growth will slow anytime soon, and since Nvidia is in high-growth mode, a different metric may be needed to gauge the stock's potential. The PEG ratio -- a company's PE divided by its expected growth rate -- attempts to account for growth and is a better metric here. Conventional wisdom suggests that stocks with a PEG ratio of 1 or lower are trading at a discount. Nvidia's PEG ratio is 1.1 while Apple's is 2.4, suggesting Nvidia is the bargain here. If Nvidia continues growing as it has, its high PE is easily justified, and Apple will struggle to hold the No. 1 position.

Will Nvidia Be the First Stock to Reach $10 Trillion? | The Motley Fool

It might be years away, but some company will eventually get there. The artificial intelligence (AI) chip leader reached a new all-time high on Thursday, fueled by a strong third-quarter earnings report from close partner Taiwan Semiconductor Manufacturing and enthusiasm around its new Blackwell platform, which is reportedly sold out for the next year. Nvidia CEO Jensen Huang even said recently that demand for the new chips was "insane." Taiwan Semi also helped tamp down concerns about an AI bubble as CEO C.C. Wei noted that his company works with almost every AI innovator, and said of AI, "The demand is real, and I believe it's just the beginning of this demand." He also predicted, "It will continue for many years." Nvidia has thus far claimed most of the spoils in the AI race as the stock has gained close to 10x since the start of 2023, shortly after ChatGPT was launched. Along the way, Nvidia has added roughly $3 trillion in market cap, and it's now the second most valuable company in the world behind Apple (AAPL -0.26%). As of Oct. 18, Nvidia's market cap was $3.39 billion, just shy of Apple at $3.57 trillion. Microsoft isn't too far behind at $3.11 trillion. It might seem far-fetched to predict the first company to reach $10 trillion, but it's more likely to happen than it may seem. Apple became the first U.S. company to reach a valuation of $1 trillion, which at one point seemed impossible, in August 2018, and it only took the iPhone maker another five years to reach $3 trillion -- becoming the first to pass that milestone as well. If Apple was able to reach $1 trillion and then triple its valuation in just five years, it might not be as difficult as it might seem for Nvidia or one of its peers to triple in valuation, say within the next five to 10 years, to reach a market cap of $10 trillion. In addition to the three $3 trillion companies, there are also five more stocks with market caps of $1 trillion or more. Those are Alphabet, Amazon, Meta Platforms, Taiwan Semi, and Berkshire Hathaway. In order for any of these companies to achieve a $10 trillion valuation, they will have to deliver strong growth on the top and bottom lines and likely expand their addressable markets along the way. Berkshire Hathaway, the only non-tech company on the list, seems unlikely to get there as it mostly operates mature businesses that grow at a pace similar to the overall economy. The rest of these businesses have faster growth rates, but the ones that are already above $3 trillion are significantly closer to the goal than those valued at around $2 trillion or less. Out of Apple, Microsoft, and Nvidia, Nvidia is by far the fastest-growing. The company has reported five straight quarters of triple-digit revenue growth, and while that streak is expected to end in the third quarter, analysts still expect Nvidia's blistering revenue growth to continue. The consensus calls for Nvidia to report 82% revenue growth in the third quarter and 43% in 2025 to reach $182 billion. In addition to outgrowing its big tech peers, Nvidia also seems better prepared to capitalize on the next big innovation in technology, much as it has with generative AI and cryptocurrency before that. Nvidia figures to be a winner from emerging technologies like autonomous vehicles and robotics as it's established a significant competitive advantage in AI GPUs, which will be necessary to power those technologies. Investors should also be mindful that the innovation that leads to the first $10 trillion company may not even be visible now. The growth possibilities at Apple and Microsoft seem more constrained. Both companies dominate their respective subsectors, Apple with consumer electronics and Microsoft with enterprise software. But those categories offer less growth. Smartphones are already a mature market. Apple can coax its customers to spend more on iPhones and sell more services and accessory devices like AirPods and Apple Watches, but people generally only need one phone each. Microsoft's business is more connected to enterprise tech spending, but again the upside potential is not as large as Nvidia's. It's rare for a company to, say, double its software spend in a year. Whether Nvidia is able to grow to a $10 trillion valuation will depend on its ability to fend off competition, capitalize on the AI boom, and maintain, or even expand, its huge profit margins. Doing that won't be easy, but it is possible, especially over a horizon of five or 10 years. Apple's surge from $1 trillion in 2018 to $3.5 trillion today is a reminder that there's no strict upper limit on stock market valuations. Even as Nvidia has already delivered monster gains for investors, there's still more upside potential for the stock. A $4 trillion market cap isn't too far away for Nvidia now, and over a longer time frame, $10 trillion is achievable.

Could Nvidia Generate $2 Trillion in Revenue Between Now and 2030? Here's What Wall Street Thinks. | The Motley Fool

The artificial intelligence (AI) chipmaker Nvidia (NVDA 4.14%) has been the darling of the stock market for several years now. The stock is up more than 2,800% over the last five years and roughly 190% this year. As the main picks-and-shovels play for AI, which many believe can disrupt almost all parts of the economy, it's easy to see why investors are so enthusiastic about the stock. In fiscal years 2023 and 2024, Nvidia generated total revenue of nearly $27 billion and $61 billion, respectively, which equates to 126% growth. Can Nvidia keep building on this momentum and potentially generate trillions of dollars of revenue between now and 2030? Here's what Wall Street thinks. Nvidia is a little different from most public companies in that its fiscal year runs from February to January of the following year, so Nvidia is actually in its 2025 fiscal year right now. To answer our question, we can look at consensus estimates to see how much revenue analysts on Wall Street are forecasting for Nvidia for the remainder of fiscal 2025 and the following years up to fiscal 2030. The consensus looks at all or a large group of analysts on Wall Street and compiles their estimates to arrive at an average -- or sometimes median -- number. It's important to understand that the more analysts in consensus, the more accurate that consensus will likely be. Consensus changes as analysts update estimates based on new information like earnings or big announcements. Luckily, a popular, highly liquid stock like Nvidia has plenty of analysts watching its every move. Here are revenue estimates (as of Oct. 17) in millions for fiscal years 2025 to 2030, according to Visible Alpha, a part of S&P Global Market Intelligence: Data source: Visible Alpha. As you can see above, I also included the lowest and highest analyst estimates to provide an idea of the range. Given that fiscal 2025 is more than halfway complete, the range of estimates is tighter because analysts have more line of sight into the current year. Additionally, there are 34 analysts with estimates for 2025. However, the range gets wider and the analyst group grows smaller as the years progress, because it is harder to project out that far. There are only three estimates for 2030, so those numbers are less reliable. Most of these numbers, if not all, will probably change as new information becomes available and Nvidia continues to report earnings. The consensus suggests Nvidia will generate roughly $1.29 trillion of revenue if you add all revenues between 2025 and 2030. However, the high estimate on Wall Street for each year added together adds up to $2 trillion, so it's possible under Wall Street's most bullish outlook, as things stand now. However, investors should always try to be conservative in forecasting. I also think it's telling that the low estimates are much closer to consensus than the high estimates. Ultimately, Nvidia's revenue will be highly influenced by the overall long-term impact of and demand for artificial intelligence, which is hard to quantify today. Nvidia already trades at a very high valuation, so I wouldn't use the Street's high estimate to arrive at a future valuation by forecasting revenue and earnings. I would stick to consensus or the lower estimates before breaking out the calculator.

Nvidia market cap closing in on $3.5 trillion: Will it surpass Apple soon?

The stock market is volatile and unpredictable. Here's why stock prices move and how to navigate it as an investor. $15.7 trillion. That's how much PwC, one of the "big four" accounting firms, believes artificial intelligence (AI) could add to the global economy annually by 2030. That sort of boost doesn't come along very often. The technology has true revolutionary potential that we probably haven't seen since the introduction of the internet. As the company helping drive this AI revolution like no other, Nvidia (NASDAQ: NVDA) has already captured a significant share of that growing market. Since the AI boom took off in late 2022, the company has added more than $3 trillion in market capitalization, currently sitting just shy of $3.4 trillion and only $190 billion or so from overtaking Apple (currently at $3.57 trillion) as the most valuable company in the world. Nvidia's dominance in its industry is due largely to its superior technology. The company's chips are consistently faster and more efficient than what its competitors have to offer, which has led to its control of roughly 90% of the market. It means that last quarter, Nvidia's net income from its AI chip market was roughly 25 times that of its closest competitor, Advanced Micro Devices. Nvidia knows this advantage is fragile, and it must do everything it can to maintain its edge. To do this, it has committed to updating its chips every year (rather than every 2-3 years), which is a tall order to be sure. At present, the company's current Hopper chips are still selling like hotcakes - Elon Musk ordered 100,000 of them not long ago to build the world's fastest supercomputer - but Nvidia's new Blackwell chips will begin shipping soon. CEO Jensen Huang says demand for the new chips is "insane," and, according to some reports, they are already sold out for the next 12 months. Nvidia is attempting to expand production, partnering with Foxconn to build the world's largest Blackwell production facility in Mexico. Incredibly, analysts at Morgan Stanley project that Blackwell could bring in $10 billion in added revenue before this year ends. That is much higher than the company's own guidance, so take this forecast with a grain of salt, but it's clear that demand is very strong. We'll see how many chips the company can actually ship. Apple is having some growing pains Apple is growing, especially in its services segment, and Wall Street seems relatively bullish. However, reports of less-than-stellar sales of its latest iPhone model are cause for concern. There are indications that sales may have slipped in China, a key market, and at home, the company is banking on its AI integrations - called Apple Intelligence - which require a newer iPhone to spur upgrades and boost sales. The jury is still out on whether the changes will be impressive enough for consumers to justify an upgrade. We'll learn a lot in the company's upcoming earnings release later this month. Hopefully, the company has been able to improve its iPhone sales while continuing to take advantage of its service segment, which includes things like Apple TV, Apple Music, and the Apple Store. Nvidia will pull ahead Given Nvidia's Blackwell roll-out and credible reports of demand echoing the demand from last year that spurred its incredible sales growth, I think Nvidia's share price will rise faster than Apple's, and it will take the lead position in the race for world's largest market cap. Nvidia stock trades at quite a premium, and that needs to be kept in mind. With a valuation like that, investors expect major growth. If Nvidia can't maintain its outsized growth rate, its stock price may come back down to earth. So far, it doesn't look like that growth will slow anytime soon, and since Nvidia is in high-growth mode, a different metric may be needed to gauge the stock's potential. The PEG ratio - a company's PE divided by its expected growth rate - attempts to account for growth and is a better metric here. Conventional wisdom suggests that stocks with a PEG ratio of 1 or lower are trading at a discount. Nvidia's PEG ratio is 1.1 while Apple's is 2.4, suggesting Nvidia is the bargain here. If Nvidia continues growing as it has, its high PE is easily justified, and Apple will struggle to hold the No. 1 position. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. 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