As we approach the end of 2024, savvy investors are repositioning their portfolios for the new year. Those who invested in Nvidia (NASDAQ: NVDA) at the beginning of the year are celebrating impressive gains, with the stock soaring around 150%. While it’s natural to wonder if this momentum can continue, hints from other companies’ conference calls suggest that 2025 may be just as promising for Nvidia.
The driving force behind Nvidia’s success is the artificial intelligence (AI) boom, which relies heavily on its graphics processing units (GPUs). These powerful processors enable rapid training of complex AI models, a crucial factor in the development of cutting-edge technologies like Meta Platforms’ (NASDAQ: META) Llama generative AI model. As these models evolve, training times increase exponentially, prompting innovators to seek more computing power to accelerate the process.
This trend is not unique to Meta, as other industry giants like OpenAI and Alphabet are also pushing the boundaries of AI capabilities. To stay ahead, they’ll need to significantly boost their computing power, which bodes well for Nvidia. In fact, Meta has already indicated that its infrastructure costs will surge in 2025, largely due to its AI computing power build-out.
Nvidia is poised to capitalize on this trend, particularly with the upcoming launch of its Blackwell technology. This innovative architecture promises 3-5 times more AI throughput in power-limited data centers than its current Hopper architecture, making it an attractive solution for AI developers. Wall Street analysts are bullish on Nvidia’s prospects, forecasting 42% revenue growth in fiscal year 2026, accompanied by strong earnings growth.
While predicting the future is inherently uncertain, Nvidia’s current trajectory suggests that its stock could continue to thrive. However, investors must consider whether the demand for its GPUs will persist beyond fiscal 2026. If it does, Nvidia’s stock may be an attractive opportunity. But if the demand wanes, the stock’s value may stagnate.
Before making a move, investors may want to explore other promising opportunities. The Motley Fool’s Stock Advisor team has identified 10 top stocks with potential for monster returns in the coming years. While Nvidia didn’t make the cut, these picks could provide a valuable addition to any portfolio.
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