Nvidia: $180B AI Stock Growth Catalyst in 2025

Published Date : 31/12/2024 

Despite recent stock concerns, Nvidia is poised to generate significant revenue from AI processors in 2025, making it a compelling investment opportunity. 

Semiconductor giant Nvidia (NVDA) had a fantastic 2024, but a closer look at its recent stock performance shows it’s entering 2025 on uncertain ground.

The company’s stock has declined by more than 6% since the release of its fiscal 2025 third-quarter results on November 20, 2024.

Despite exceeding expectations in both revenue and earnings, investors are worried about potential margin pressures from the ramp-up of its Blackwell AI processors and a slowdown in top-line growth.

However, savvy investors should not overlook the significant catalyst that could drive Nvidia’s growth in 2025.

According to investment bank Jefferies, Nvidia is expected to ship approximately 6 million data center GPUs in 2025, generating between $180 billion and $200 billion in revenue.

This forecast is conservative compared to buy-side estimates, which range from $205 billion to $215 billion.

Morgan Stanley, for instance, anticipates that Nvidia will generate $210 billion in revenue from its Blackwell systems alone in 2025.

This suggests that the company’s overall data center revenue could be even higher, considering it will continue to sell its previous generation Hopper processors.

Even if Nvidia achieves the lower end of Jefferies' estimate, it would be a significant improvement over its 2024 revenue.

In the first nine months of fiscal 2025, Nvidia’s data center revenue reached $79.6 billion, including sales of data center networking chips.

The company sold $69.6 billion worth of data center GPUs, with the remaining $10 billion attributed to networking products.

Data center GPUs accounted for 76% of the $91 billion revenue generated in the first nine months of the fiscal year.

Nvidia has forecasted $37.5 billion in revenue for the fourth quarter of fiscal 2025, with data center GPUs contributing around 75% of this revenue.

This would bring the total data center GPU revenue for fiscal 2025 to $97.6 billion.

Jefferies' estimate suggests that Nvidia’s data center GPU sales could increase by at least 84% in fiscal 2026, which aligns with the majority of calendar 2025.

The $180 billion estimate is based on an average selling price of $30,000 for each data center GPU.

With Blackwell processors expected to be priced between $30,000 and $40,000, there is room for a higher average selling price, potentially boosting data center GPU revenue in 2025.

Other estimates also point to higher GPU shipments in the new year, suggesting stronger-than-expected revenue.

Jefferies' forecast indicates an incremental $82.4 billion in data center GPU revenue for the following year, bringing Nvidia's total revenue to $211 billion in fiscal 2026.

Given the company’s growth in other end markets, it could exceed the average revenue estimate of $195 billion for fiscal 2026.

Investors should consider buying Nvidia stock now while it trades at an attractive forward earnings multiple of 32, lower than the Nasdaq-100 index's earnings multiple of 33.

Additionally, Nvidia’s price/earnings-to-growth (PEG) ratio of 0.98, according to Yahoo! Finance, suggests the stock is undervalued given its earnings growth potential.

This makes Nvidia a compelling buy, especially with the potential for a significant rebound in 2025. 

Frequently Asked Questions (FAQS):

Q: What is Nvidia's projected revenue for 2025?

A: Jefferies estimates that Nvidia could generate between $180 billion and $200 billion in revenue in 2025 from sales of its data center GPUs.

Q: Why are investors concerned about Nvidia's stock?

A: Investors are concerned about potential margin pressures from the ramp-up of Blackwell AI processors and a slowdown in top-line growth, which has led to a 6% decline in Nvidia's stock price since November 20, 2024.

Q: What is the current forward earnings multiple for Nvidia stock?

A: Nvidia stock is currently trading at a forward earnings multiple of 32, which is lower than the Nasdaq-100 index's earnings multiple of 33.

Q: What is Nvidia's price/earnings-to-growth (PEG) ratio?

A: Nvidia's PEG ratio is 0.98, indicating that the stock is undervalued given its earnings growth potential.

Q: What is the estimated average selling price of Nvidia's data center GPUs in 2025?

A: The estimated average selling price of Nvidia's data center GPUs in 2025 is $30,000, with Blackwell processors expected to be priced between $30,000 and $40,000. 

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