NVIDIA’s (NVDA) New Blackwell GPU Expected to Keep Momentum Strong in 2025

Stock (Symbol)

NVIDIA (NVDA)

Stock Price

$117

Sector

Data is as of

Expected to Report

Company Description

NVIDIA Corporation is a personal computer (PC) gaming market.

The Company’s segments include Graphics and Compute & Networking.

The Graphics segment includes GeForce graphics processing units (GPUs) for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems, and Omniverse software for building three-dimensional (3D) designs and virtual worlds.

The Compute & Networking segment includes Data Center platforms and systems for artificial intelligence (AI), high-performance computing (HPC), and accelerated computing; Mellanox networking and interconnect solutions; automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions; cryptocurrency mining processors (CMP); Jetson for robotics, and NVIDIA AI Enterprise. Source: Refinitiv

Sharek’s Take

NVIDIA was originally focused on the computer graphics market, and invented the first graphics processing unit (GPU) in 1999 which  made the company the leader in computer graphics. The company introduced its CUDA programming model in 2006 and ushered in parallel processing of its GPU for high-performance computing that could be used in fields including aerospace, biotechnology, and energy exploration. NVDA has since expanded its architecture to scientific computing, artificial intelligence, data science, autonomous vehicles, robotics, and virtual reality (or AR). NVIDIA’s rapid growth is driven by its Data Center segment, due to the strong demand for Generative AI platforms.

The NVIDIA DGX platform is the world’s first AI supercomputer. Here’s how it works:

• Hopper: Built with 80 billion transistors, Hopper is the world’s most advanced chip ever built.
• H100 GPU: The H100 server is built with Hopper GPUs. H100s cost roughly $30,000 each.
• The DGX GPU: The DGX H100 is eight H100 modules working as one giant GPU. All in a compact box that’s 14″ x 19″ x 36″. A DGX server with 8 H100s costs around $300,000.
• AI Supercomputer: Then, hundreds or even thousands of NVIDIA DGX nodes connect to become an AI supercomputer. Thus, 100 DGX 8-H100 servers could be $30 million, 1000 servers might be $300 million. This is the blueprint for AI factories worldwide.

NVDA has four operating segments : Gaming, Data Center, Professional Visualization and Automotive. Here are segment stats from last qtr:

1. Data center: 87% of total company revenue, +154% growth y.o.y.
   • This segment is comprised of data center platforms, large Enterprise IT systems, and cloud computing networks.
   • The increase was primarily driven by strong demand for NVIDIA Hopper GPU computing and networking platforms.
2. Gaming: 10% of total revenue, +16% growth y.o.y.
   • NVDA gaming platforms have historically given video gamers sharper, smoother, higher-quality graphics with its GeForce line.
   • Management saw sequential growth in console, notebook, and desktop revenue.
   • Demand is strong and growing, and channel inventory remains healthy.
3. Professional Visualization: 2% of total revenue, +20% growth y.o.y.
   • This segment is digital content creation, including professional video editing, special effects for films, architectural design, and product manufacturing.
   • Demand is primarily driven by AI and graphic use cases, including model fine-tuning and omniverse-related workloads.
4. Auto: 1% of total revenue, 37% growth y.o.y.
   • NVIDIA Drive is a complete solution for the Autonomous Vehicle market, including infotainment systems and autonomous driving.
   • Growth was driven by the new customer ramps in self-driving platforms and increased demand for AI cockpit solutions.

NVIDIA is in a golden era of a universal upgrade in computing. The company breaks down the four previous eras as (1) PC lead by IBM, (2) Internet, (3) Mobile & Cloud lead by the iPhone, and (4) AI. I consider NVDA a rapid grower, which in my opinion is a company growing year-over-year profits 65% or greater. Analysts give NVDA an Estimated Long Term Growth Rate of 53%. Management even buys back stock and pays a small dividend. In 2023, management returned $9.5 billion in stock buybacks and $400 million in cash dividends. NVIDIA is the top holding in my Growth Portfolio and Aggressive Growth Portfolio. The P/E of 41 is reasonable, and when we figure in profit estimates, my analysis shows the stock could rise 50% or more by the end of 2025.

One Year Chart

This stock is basing after a well deserved run higher. Note profits are still growing at triple-digit rates. This stock still looks great.

This stock has a P/E of 41. A little bit undervalued to what I think it should be, but it can be better. Note, my fair value is a P/E of 45.

The Est. LTG is 53%. The Est. LTG is analysts’ 3-5 year guess of annual profit growth (not stock growth). This is a very high number.

Earnings Table

Last qtr, Nvidia reported 152% profit growth and beat estimates of 134%. Revenue grew 122% and beat estimates of 110%.

Demand for Blackwell platforms is well above supply, and management expects this to continue into next year. The H200 began ramping last qtr. China was a significant contributor to data center revenue. Management stated Cloud Services represented roughly 45% of data center revenue, and more than 50% stem from the consumer, internet, and enterprise companies. Here’s the Data Center revenue the past six quarters:

6QtrsAgo: $4.3 billion
5QtrsAgo: $10.3 billion
4QtrsAgo: $14.5 billion
3QtrsAgo: $18.4 billion
2QtrsAgo: $22.6 billion
LastQtr: $26.3 billion

Annual Profit Estimates continue to go higher. Notice 2025 estimates keep jumping.

Qtrly Profit Estimates for the next 4 qtrs are 84%, 57%, 44%, and 52%. For next qtr, analysts predict revenue will climb 110% year-over-year.

Fair Value

NVDA stock has a P/E of 41.

My Fair Value is a P/E of 45. This gives me a Fair Value of $128 for this year and $181 by next year.

Also, 2025 estimates have been climbing. So I may be underestimating the profit figure at this time.

Bottom Line

NVIDIA (NVDA) stock has had a rocky decade.

Then the stock fell in late-2018 as the company had lots of returns of its high-end processors as the price of Bitcoin declined and cryptoy miners returned their gear back to NVDA. Note profits fell in 2019.

The 2022 slump was due to a downturn in sales in the Gaming division as (1) businesses were flush with cash in 2021 and had already upgraded computers and (2) Bitcoin miners found it unprofitable to mine with lower crypto prices combined with high electricity costs.

In January 2023 the stock pushed past $20 and ended that year at $50 as Datacenter sales pushed higher due to AI investments. 2024 has been a great year as well, the stock’s doubled again.

NVIDIA continues to be a true market leader. The stock is basing and seems to be ramping up for another move higher as Blackwell takes center stage.

NVDA ranks first in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings.

Power Rankings

1 of 32

Aggressive Growth Portfolio

1 of 15

Conservative Stock Portfolio

N/A