The artificial intelligence (AI) revolution that dawned in early 2023 has proven to be a boon for chipmaker Nvidia (NASDAQ: NVDA). Innovators in graphics processing units (GPUs), Nvidia has been riding the crest of this transformative wave. From powering video games to data centers and advancing AI, Nvidia’s GPUs have set the industry gold standard. The stock’s breathtaking rise of over 800% in 2023, drawing it near to its all-time high (as of now), is undoubtedly impressive but has not been without its share of bumps.
Unpacking the AI Demand Conundrum
The uniqueness of generative AI lies in its demand for enormous datasets and the computational might to interpret them. Nvidia, holding an estimated 98% market share in 2023 — akin to 2022 figures as reported by TechInsights, was at the vanguard of this phase in AI evolution.
With stellar earnings leveraging this trend for five consecutive quarters, the market faced a jolt when Nvidia projected 79% growth for its fiscal 2025 third quarter, clouding the outlook. However, recent developments suggest that the AI boom is far from waning.
Super Micro Computer’s revelation of shipping 100,000 GPUs quarterly underscored robust demand. Nvidia’s CEO Jensen Huang’s observations on the “insane” demand for Blackwell, its cutting-edge AI platform, further affirm a rising tide of AI applications.
Clear-Cut Evidence
Nvidia’s financial performance in the fiscal 2025 second quarter showcased phenomenal success. Record data center revenue of $26.3 billion fueled an impressive 122% year-over-year revenue growth to $30 billion, with profits also skyrocketing.
While awaiting the fiscal third-quarter results slated for late November, Nvidia’s forecasted revenue of $32.5 billion, depicting a 79% year-over-year uptick, portends another strong performance.
The seeming costliness of Nvidia’s valuation at 62 times earnings may deter some but contrasting this with a projected forward P/E ratio of 33, strikingly proximate to the S&P 500’s multiple of 30, augurs well for the stock.
Seizing the Opportunity
For astute investors eyeing potential gains, the opportunity to capitalize on Nvidia’s upward trajectory may still be within reach. The market’s shifting dynamics and Nvidia’s pivotal role in AI innovation make a compelling case for considering investment in Nvidia stock.