Semiconductor giant Nvidia (NVDA 0.35%) The company had a great year in 2024, but a close look at its recent stock chart shows that it’s entering the new year on shaky ground, with doubts about the company’s ability to maintain its impressive pace of growth. Specifically, NVIDIA stock has fallen more than 6% since the company announced its fiscal year 2025 third quarter results on November 20, 2024.
The chipmaker’s sales and profits beat expectations last quarter and its guidance beat expectations, but investors expect Nvidia’s profits to come under pressure thanks to a buildup of Blackwell artificial intelligence (AI) processors and a slowdown at the top. It seems that they are concerned about the possibility of -Line growth.
However, smart investors would do well to look beyond these concerns, as there are major catalysts that could help NVIDIA regain its momentum in 2025.
Nvidia could sell at least $180 billion worth of AI processors in 2025
According to various reports, investment bank and financial services provider Jefferies estimates that Nvidia will ship approximately 6 million data center graphics processing units (GPUs) in 2025, and that the chipmaker will have a total market share of between $180 billion and $200 billion. We estimate that we can generate revenue. And Jefferies’ forecast is on the conservative side compared to the buy-side estimate of $205 billion to $215 billion.
For example, Morgan Stanley expects NVIDIA to generate $210 billion in revenue in 2025 from sales of Blackwell systems alone, given that the company will continue to sell previous generation Hopper processors in 2025. , indicating that overall data center revenue could be even higher. But even if Nvidia were able to achieve at least $180 billion in data center GPU revenue in 2025, that would still be significantly more than its potential data center revenue. 2024.
For the first nine months of fiscal year 2025 (ending October 27, 2024), Nvidia’s data center revenue was $79.6 billion. However, this figure also includes sales of Nvidia’s data center networking chips. Nvidia sold $69.6 billion worth of data center GPUs in the first three quarters of fiscal 2025, with the remaining $10 billion coming from sales of networking products.
Data center GPUs alone accounted for 76% of the $91 billion in revenue Nvidia generated in the first nine months of its fiscal year. The company forecast sales of $37.5 billion for the fourth quarter of fiscal 2025 (ending in January 2025). Assuming data center GPUs continue to contribute 75% of revenue in the fiscal fourth quarter, Nvidia’s revenue from sales of these chips could reach $28 billion.
Adding this number to the data center revenue that Nvidia generated in the first nine months, the company is expected to end fiscal year 2025, the 11th month of calendar 2024, with annual data center GPU revenue of $97.6 billion. It will be. Jefferies estimates that Nvidia’s data center GPU sales could increase at least 84% in fiscal year 2026, which coincides with most of the 2025 calendar year.
Jefferies’ $180 billion estimate is based on an average selling price of $30,000 for each data center GPU sold by Nvidia. This is not surprising since the company’s Blackwell processors are expected to cost between $30,000 and $40,000.
However, that price range also means there is a market for higher average selling prices, which could allow Nvidia to further increase its data center GPU revenues in 2025. Meanwhile, other estimates suggest an increase in Nvidia’s data center GPU shipments in new markets. year. Therefore, it’s possible that Nvidia will generate better-than-expected data center GPU revenue next fiscal year.
Additionally, Jefferies’ forecasts indicate Nvidia could increase data center GPU revenue by $82.4 billion next year (calculated by subtracting estimated fiscal year 2025 revenue of $97.6 billion from $180 billion). . Assuming Nvidia’s other businesses remain stagnant, fiscal year 2026 sales could reach $211 billion ($82.4 billion plus Nvidia’s estimated fiscal year 2025 sales of $128.5 billion). number).
However, the company is seeing growth in all of its other end markets as well, indicating it may be on track to hit its 2026 average revenue forecast of $195 billion.
It’s easy to buy stocks now
From the above discussion, we can see that NVIDIA has the potential to achieve significant growth in 2025 as well, exceeding analysts’ expectations. That’s why smart investors are willing to buy this AI while it trades at an attractive forward P/E of 32x, which is lower than the 33x P/E of the Nasdaq 100 Index (which uses the index as a proxy for tech stocks). It would be a good idea to buy stocks.
Additionally, NVIDIA has a price-to-earnings ratio (PEG ratio) of 0.98, according to Yahoo! finance. This is another indicator that NVIDIA is worth buying now. A PEG ratio of less than 1 means the stock is undervalued considering its earnings growth potential. In 2025, it could grow faster than expected and the stock price could soar again. , following the recent downturn.
