Is Nvidia a Growth Stock with Sustained Momentum?

Nvidia's impressive revenue growth has been a key driver of its stock performance. The company's revenue has increased by 50% year-over-year, reaching $10.9 billion in 2020.

This growth is largely due to the increasing demand for Nvidia's graphics processing units (GPUs) in the gaming and datacenter markets. In the gaming market, Nvidia's market share has grown to 83%, a significant increase from 64% in 2015.

Nvidia's datacenter business has also experienced rapid growth, with revenue increasing by 300% in 2020 compared to the previous year. This growth is driven by the increasing adoption of artificial intelligence (AI) and high-performance computing (HPC) applications.

Nvidia's strong financials and growing market share make a compelling case for its growth stock potential.

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Nvidia's growth is driven by its Blackwell platform launch, which promises to lower costs and energy consumption by up to 25 times. This platform is already in high demand, with Meta Platforms, Alphabet, and Microsoft rumored to have orders valued at tens of billions.

The Blackwell GPU architecture incorporates multiple innovations to trim the energy consumption required for developing, training, and running large language models. Nvidia says this will lower costs and energy consumption by up to 25 times.

Government demand is another growth driver, with Forbes Senior Contributor Peter Cohan believing governments will increasingly invest in high-performance GPUs to develop their own large language models. This will be in their language and with their data.

Data center demand is also a key driver, with Nvidia's hardware allowing data centers to maximize their utilization by supporting generative AI and 5G applications. Utilization and efficiency will continue to be prioritized in the data center as computing demand grows.

Three key growth drivers for Nvidia are:

These growth drivers have contributed to Nvidia's impressive revenue and earnings growth, with the company reporting record revenue of $26.04 billion for its fiscal 2025 first quarter, more than triple what it was in the year-ago period.

Nvidia has consistently blown away investors' expectations on revenue and earnings in recent quarters. In fact, the company reported record revenue of $26.04 billion for its fiscal 2025 first quarter, more than triple what it was in the year-ago period.

This impressive growth is largely driven by the surging demand for AI-related hardware. Truist analysts highlighted the near-term upside potential given that "NVDA's supply chain is gearing up to deliver $150-200B of datacenter sales" in 2025.

Nvidia's shift to offering "truly full stack solutions" rather than simply chips as they did in the past has also been a major factor in their revenue and EPS acceleration. This trend is expected to continue, driven by the growing demand for the company's Blackwell platform.

Here are some key statistics that illustrate Nvidia's organic sales growth:

As a result of this impressive growth, Nvidia's stock has gained 172% so far in 2024, and the company's shares were up 2.5% at $134.72 in afternoon trading Wednesday, approaching their all-time closing high of $135.58 set on June 18.

Nvidia's growth is driven by its Blackwell platform launch, which incorporates multiple innovations to trim energy consumption required for developing, training, and running large language models. This platform is expected to lower costs and energy consumption by up to 25 times.

Several major companies, including Meta Platforms, Alphabet, and Microsoft, have already placed orders for the Blackwell platform, valued at tens of billions. This strong demand for the platform is a significant growth driver for Nvidia.

Nvidia's government demand is also expected to increase as governments invest in high-performance GPUs to develop their own large language models. This trend is expected to continue as governments prioritize AI development.

Data center demand is another key driver of Nvidia's growth, as its hardware allows data centers to maximize utilization by supporting generative AI and 5G applications.

Here are some key statistics highlighting the growth potential of Nvidia's Blackwell platform:

Nvidia's growth is also driven by its shift to offering full-stack solutions, rather than just chips. This approach has led to a significant acceleration in revenue and earnings growth over the past four quarters.

Nvidia's market position is a key factor in determining its growth potential. The company owns 88% of the GPU market as of the first quarter 2024, a significant increase from 80% in the prior quarter.

Nvidia's dominance in the GPU market is largely due to its focus on AI-capable chips and related software. This strategic focus has allowed the company to capture a significant share of the market.

One of the major market opportunities for Nvidia is AI. The company's dominance in AI infrastructure is well-documented, and it is well-positioned to capture the bulk of AI value creation over the next five years.

Nvidia's AI business dwarfs its gaming segment in terms of revenue, but the company has a vision for synergies between AI and gaming. AI-driven improvements in graphics and game dynamics could inspire a resurgence in the video game market.

The company's Omniverse, AI, and OpenUSD support digital-twin development, which has broader implications for robotics innovation and other generative physical AI applications. This technology has the potential to drive significant innovation and transformation across various industry landscapes.

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Here are the major market opportunities for Nvidia:

Nvidia owns 88% of the GPU market as of the first quarter 2024, a significant jump from 80% in the prior quarter.

This dominance came at the expense of competitors Advanced Micro Devices (AMD) and Intel, which both lost share in the first quarter.

Nvidia's strong market position is a testament to its innovative products and strategic investments in AI-capable chips and related software.

Nvidia's market position is a force to be reckoned with, dominating the GPU market with an impressive 88% market share as of the first quarter 2024. This is a significant jump from 80% in the prior quarter.

Techspot reports that Nvidia's dominance came at the expense of competitors Advanced Micro Devices (AMD) and Intel (INTC), which both lost share in the first quarter.

Nvidia is the current leader in AI chip market, but competition is expected to increase over the next five years.

The closest competitors to Nvidia are chipmakers AMD and Intel, who are likely to give Nvidia a run for its money in the future.

Sanctions prevent Nvidia from selling its highest-performance chips into China, which may give international competitors a chance to gain ground.

Cloud providers, including Microsoft, Alphabet, and Amazon, are also a threat to Nvidia's market position, as they work to develop their own AI solutions and may eventually become competitors.

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Nvidia's current financial health is a testament to its impressive growth. The company generated $26 billion in sales in the first quarter of fiscal year 2025, a 262% increase from the prior-year quarter.

Its gross margin increased by 12.1 points, and non-GAAP diluted earnings per share rose to $6.12, a 461% jump from the previous quarter. This growth is not a one-time anomaly; over the past 18 months, Nvidia has quadrupled its annual sales and added nearly 20 points to its gross margin.

Nvidia's balance sheet is also in great shape, with its cash balance doubling in 2023 and now exceeding its debt. This financial stability provides a solid foundation for the company's future growth.

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Nvidia's third-quarter sales came in at $35.08 billion, beating analysts' estimates of $33.17 billion.

Sales nearly doubled from the prior year, when Nvidia reported $18.1 billion in revenue.

The company's earnings of 81 cents per share also exceeded expectations, with analysts polled by FactSet predicting 75 cents per share.

ASML, a chip lithography gear maker, maintained its 2030 sales target of $46.3 billion at the lower end, after warning of slower demand in 2025.

Analysts at Jefferies Group believe the slowdown in chip demand is temporary.

Nvidia's sales beat its own outlook of $32.5 billion for the quarter, showing a strong performance.

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Nvidia generated $26 billion in sales in the first quarter of fiscal year 2025, a 262% increase from the prior-year quarter.

This significant growth in sales is reflected in the company's non-GAAP diluted earnings per share, which was up 461% year-over-year.

Nvidia's gross margin increased by 12.1 points, a notable improvement that demonstrates the company's ability to scale efficiently.

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The company's cash balance doubled in 2023, and Nvidia now has more cash than debt, indicating a strong financial position.

In just 18 months, Nvidia has quadrupled its annual sales and added nearly 20 points to its gross margin, a testament to the company's impressive growth trajectory.

The stock price has gained nearly 500% as a result of this growth, making it a compelling investment opportunity.

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Nvidia's growth stock status is not without its risks and challenges. Market volatility can be a significant risk for investors, as seen in the company's recent price fluctuations.

Nvidia's dominance in AI chips is not guaranteed, and the company will need to innovate faster and cheaper than its competitors to maintain its lead. Rising competition from other tech companies could erode its market share.

The launch of new products requires careful planning and resource allocation, and Nvidia has faced delays in the past, such as the Blackwell platform's design flaw. This uncertainty can be a challenge for investors.

Here are the three main risks to monitor for Nvidia:

Investors are in a watch-and-wait mode for Nvidia, and the company's sales of its Blackwell chip will be a key driver for its stock performance.

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Nvidia's Investment Potential is a topic of great interest for investors, and for good reason. Its dominance in the chip design industry, enviable customer list, and knack for innovating make it a promising long-term investment.

The company's position in the AI sector is particularly noteworthy, with AI chips from Marvell Technology projected to achieve an impressive 200% growth in the next year alone. This underscores the strategic pivot towards semiconductor companies like Marvell.

Nvidia's financial health is also a major draw, with robust earnings and remarkable profit margins. Its cash reserves are substantial, and it has a proven process for innovating, which positions it well for long-term growth.

Investors should be aware that Nvidia's multiples are well above their five-year averages, which means that the stock price may be volatile. However, this volatility can be used to the investor's advantage by waiting for a pullback.

Nvidia's growth potential is undeniable, with the company poised to double or triple in value in the next several years.

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Nvidia Stock is a must-watch due to its strong position in the artificial intelligence market. The total addressable market for AI hardware and software is expected to grow 40% to 55% annually for at least the next three years, according to consulting firm Bain.

Nvidia's next generation graphics processing unit, the GB200, is expected to reach 3 million in 2026, a significant increase from 1.5 million for its H100 units in 2023.

The company's graphics processing units help accelerate computing in data centers and AI applications, making it a leader in the industry. Nvidia was a pioneer in graphics processors used in industries such as health care, automobiles, and robotics.

Here are some key statistics about Nvidia's growth:

The time to worry about Nvidia's sustainability is clearly not now, as analysts at Bernstein say the company's phenomenal growth is not yet a cause for concern.

Nvidia's stock has seen a significant 178% rally, but investors are now in a watch-and-wait mode due to several factors.

Funds have not been rushing in to buy the stock, with an Accumulation/Distribution Rating of D-.

The relative strength line, which compares the stock to the S&P 500 index, fell sharply after the stock hit its all-time high of 152.89 on November 21.

Volume is running light, indicating fewer investors are participating in the recent selling.

Shares gained nearly 4% on December 20 after Morgan Stanley analyst Joseph Moore named Nvidia a "top 2025 pick".

Moore trimmed his price target on the stock to 166 from 168, but still expects Nvidia to perform well in the future.

Customer risk may well be Nvidia's Achilles' heel, making it vulnerable to fluctuations in demand from its main clients.

The stock also rose after Citi analyst Atif Malik noted that Nvidia's GPUs have several advantages over ASICs, including the ability to handle different workloads and high bandwidth memory.

Nvidia's CoWoS foundry capacity allocation is expected to grow to 60% in 2025 from 56% in 2024, pointing to continued GPU momentum in 2025.

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Nvidia is a must-watch due to bullish trends for artificial intelligence.

The total addressable market for AI hardware and software is expected to grow 40% to 55% annually for at least the next three years.

Nvidia's next generation graphics processing unit, the GB200, is expected to reach 3 million in 2026, a significant increase from 1.5 million for its H100 units in 2023.

Analysts at Bernstein say that after Nvidia's phenomenal growth, sustainability is the main question, but the "time to worry is clearly not now."

Nvidia's graphics processing units help accelerate computing in data centers and AI applications.

Here are some key statistics on Nvidia's growth: