Nvidia: 180 Billion Reasons Why This AI Stock Could Skyrocket in 2025

The semiconductor giant Nvidia (NVDA 0.35%) had an outstanding performance in 2024. However, a detailed look at its recent stock-price chart indicates that the company is starting the new year on uncertain footing. This uncertainty is fueled by concerns regarding Nvidia's ability to sustain its impressive growth trajectory.

Since the release of its fiscal 2025 third-quarter results on November 20, 2024, Nvidia's stock has dropped over 6%. Although the company exceeded expectations with strong revenue and earnings and provided an optimistic guidance, investors are wary about potential margin pressures due to the introduction of its Blackwell artificial intelligence (AI) processors and a slowdown in overall revenue growth.

Yet, investors may want to look past these concerns as there is a significant opportunity that could propel Nvidia's growth in 2025.

Nvidia Could Achieve $180 Billion in AI Processor Sales in 2025

According to several reports, including estimates from investment firm Jefferies, Nvidia is projected to ship around 6 million data center graphics processing units (GPUs) in 2025. This could allow the company to generate between $180 billion to $200 billion in revenue. Notably, Jefferies' forecast is conservative compared to higher buy-side estimates, which predict revenues of $205 billion to $215 billion.

For example, Morgan Stanley anticipates that Nvidia will earn roughly $210 billion from sales of its Blackwell systems in 2025. This projection suggests Nvidia’s data center revenue might be even greater, especially since the company is expected to continue selling its previous-generation Hopper processors throughout 2025. Achieving at least $180 billion in data center GPU revenue in 2025 would mark a considerable increase compared to the data center revenue potential for 2024.

In the first nine months of fiscal 2025, which concluded on October 27, 2024, Nvidia's data center revenue reached $79.6 billion. This total includes sales from both data center GPUs and networking chips, with about $69.6 billion derived from data center GPUs alone. The data center GPU sales contributed 76% of the $91 billion revenue Nvidia reported during this period.

Nvidia is targeting $37.5 billion in revenue for the fourth quarter of fiscal 2025, set to end in January 2025. Assuming a similar contribution from data center GPUs, the revenue from these chips could reach about $28 billion for Q4. Adding this figure to the first nine months’ data center GPU revenue, Nvidia is on track to finish fiscal 2025 with an estimated total of $97.6 billion in data center GPU revenue.

Jefferies predicts data center GPU sales could climb at least 84% for fiscal 2026, coinciding with the majority of the calendar year 2025. Their estimate of $180 billion is based on an average selling price of $30,000 for each data center GPU, which aligns with the expected pricing of Blackwell processors between $30,000 and $40,000.

This pricing range implies potential for an even higher average selling price, suggesting Nvidia could achieve more robust data center GPU revenue in 2025. Furthermore, other forecasts indicate the possibility of increased shipments of Nvidia's data center GPUs in the coming year, which could lead to even stronger revenue than expected.

Additionally, Jefferies’ analysis suggests Nvidia might add an extra $82.4 billion in data center GPU revenue in 2026, which leaves room for total fiscal 2026 revenues to reach approximately $211 billion, factoring in an estimated $128.5 billion for fiscal 2025.

This growth trajectory is further supported by Nvidia's expansions across other market segments, indicating the company could significantly exceed the average revenue estimate of $195 billion for fiscal 2026.

Investing in Nvidia: A Smart Move Now

The outlook for Nvidia indicates that it is poised for another year of remarkable growth in 2025, likely surpassing analysts' anticipations. For this reason, investors might find it advantageous to consider purchasing Nvidia stock while it trades at a favorable 32 times forward earnings, which is lower than the Nasdaq-100 index's earnings multiple of 33.

Furthermore, Nvidia holds a price/earnings-to-growth ratio (PEG ratio) of 0.98, as reported by Yahoo! Finance. A PEG ratio below 1 suggests that a stock is undervalued relative to its earnings growth potential. Given Nvidia's expected performance in 2025, the stock has the potential to rebound impressively from its recent stagnation.

Author has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Nvidia, AI, Stock