Spoiler alert: The ongoing bull market is no coincidence or fluke.
In theory, the size of the company is not important. An investor’s primary concern is the potential return on capital invested in a stock, regardless of the amount invested.
But in reality, the largest companies in the market are often the most profitable tickers in the market. After all, that’s how they became big names. That was certainly the case with Nvidia (NVDA -3.00%). The company was already a $360 billion company at the end of 2022, but two years of triple-digit profits turned it into a $3.4 trillion behemoth.
The question is, can the stock repeat that feat in 2025?
How did Nvidia get here in the first place?
The company is not currently the largest company on the stock market. That honor once again belongs to Apple, which is worth $3.7 trillion as of this writing. However, according to internal Motley Fool research, NVIDIA is currently in second place, with Microsoft, with a market capitalization of approximately $3.2 trillion, in third place.
In any case, a company’s size is less important to investors than the stock’s potential upside. So where does Nvidia stand on that front?
Artificial intelligence (AI) is the foundation of our recent performance and outlook. The tech giant makes graphics cards for games, illustration and design work, and automotive and robotics applications, but its biggest business today is AI data centers. This segment currently consistently accounts for more than 80% of the company’s revenue, with data center revenue increasing more than 100% year-over-year to $30.8 billion in the most recent quarter (Q3 2025). Ta.
This is a tough act to follow, and mathematically speaking, triple-digit growth like this is unlikely to continue for long. The analyst community is calling for 112% revenue growth for Nvidia in fiscal 2025, while next year’s revenue is expected to grow 52%.
Data source: StockAnalysis.com. Graph by author.
This is certainly still fast growth, supported by revenue growth that tends to be strong as well. However, the stock’s stock price is already more than 50 times its earnings per share and more than 30 times its fiscal year 2026 forecast, so potential buyers may be wary of the buoyant valuation.
The problem is that these hesitant investors may be missing some important, and bullish, realities.
Don’t ignore either of these two
First, the artificial intelligence revolution is far from over. It’s probably still in its early stages. For hardware providers like Nvidia, market research firm Mordor Intelligence sees potential growth in the industry, predicting a compound annual growth rate of 26% in AI hardware revenue through 2030. , consistent with Precedence Research’s predictions. Market.U expects this number to approach 32% by 2033.
Given that Nvidia supplies the majority of the processors used by AI data center owners and operators, they stand to gain the most from this continued market growth.
Competition is becoming certain. For example, Apple is working with Arm Holdings to develop AI-enabled chips similar to Nvidia’s technology. But every time a competitor attacks Nvidia’s dominance in the artificial intelligence hardware market, the company seems to counter with something even better. As an example, Nvidia’s recently announced NIM microservices enable a seemingly ordinary desktop computer to act as a personal supercomputer capable of processing even the most difficult inference and generative AI workloads.
And what’s the second important reality that investors must consider? Nvidia stock may be very expensive at the moment, but there’s nothing unusual about it under this ticker. . Nvidia’s trailing 12-month price-to-earnings ratio has averaged over 80 over the past five years.
The analyst community is undaunted. A majority of analysts believe NVIDIA stock remains a strong buy despite its high valuation, with a consensus price target for the stock of $174.60, 25% above current price. .
Future growth remains key
None of this inherently means that Nvidia will be the market’s best-performing stock in 2025, among the so-called “Magnificent Seven” companies, which already boast huge market capitalizations.
But by providing the foundation for artificial intelligence technology that remains in great demand and is likely to continue to be in great demand for years to come, Nvidia is well-positioned to remain one of the largest companies in the market. there is.
Still, that’s not the main reason you want to own part of the company. The bullish trend here is still rooted in Nvidia’s strong revenue and bottom line growth outlook.
James Brumley has no position in any stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
