Nvidia has been a standout performer in the artificial intelligence (AI) space this year and next. As we head into 2025, investors are wondering if it will continue to lead the pack. While predicting the future is impossible, there are key factors about Nvidia’s business that could influence its performance.
One thing is certain: Nvidia’s graphics processing units (GPUs) will be in high demand in 2025. The company’s GPUs are the backbone of many AI models, and their ability to process hundreds of calculations in parallel makes them ideal for complex tasks. This advantage over traditional computing methods ensures that Nvidia’s clients will continue to invest in its technology.
Several major tech companies, including Meta Platforms, are expanding their AI computing power. This growth is driven by the need for more powerful AI models, such as Meta’s Llama generative AI model. The upcoming release of Llama 4 will require significantly more computing power than its predecessor, and Nvidia is well-positioned to meet this demand.
Nvidia’s stock has been priced at its highest level during its recent run, with an average forecast of $193 billion in revenue for FY 2026. This represents a 49% revenue growth rate, which is impressive but also expensive. Investors are eager to see if Nvidia can maintain its high expectations and justify the current price tag.
There are three possible scenarios for Nvidia’s performance in 2025:
1. The AI build-out is far from complete, and Nvidia’s clients will continue to invest in its technology.
2. 2025 will be the peak demand for AI computing power, and Nvidia’s sales will start to slow down in 2026.
3. There will be an equilibrium between companies spending on AI computing resources and return on investment.
While it’s difficult to predict which scenario will play out, most investors view the AI space as either boom or bust. However, a combination of the first two options may be the most likely outcome. As a result, Nvidia is likely to remain a market-beating stock in 2025, but it may not be the best performer from a price appreciation standpoint.
Source: https://www.fool.com/investing/2024/11/27/is-nvidia-still-the-best-artificial-intelligence-a