NVIDIA 'Goes Crazy', Soaring $1 Trillion in 3 Months, Will This Madness Continue?

So, how much growth potential does NVIDIA still have?

The final conclusion might surprise us all!

Let’s take a look.

NVIDIA’s (Nvidia) astonishing stock price surge shows no signs of slowing down.

So far, this graphics card specialist has seen its stock price increase by 78% in 2024, unsurprisingly given the company’s excellent Q4 2024 earnings report released in February.

The semiconductor industry leader exceeded expectations with its performance and guidance, indicating that its AI-driven growth will continue. However, investors who have not yet bought NVIDIA shares, or are considering adding more NVIDIA shares to their portfolio, might wonder if it’s still timely to buy after the amazing gains in 2024.

Is NVIDIA’s stock still worth buying now?

Firstly, NVIDIA’s growth will continue

NVIDIA’s rapid stock price increase over the past year has caused some on Wall Street to worry it might be a bubble. However, investors should remember that the significant rise in stock price is supported by strong growth in revenue and profits.

The company’s revenue for the fiscal year 2024 was $60.9 billion, an increase of 126% from the previous year. Due to the low manufacturing costs and high prices of NVIDIA’s H100 graphics processing units (used for training large language models), the company’s earnings per share increased by 288%, reaching $12.96.

NVIDIA expects its revenue for the first quarter of fiscal 2025 to reach $24 billion. This would represent a 233% increase from the previous year. Analysts expect NVIDIA’s full-year revenue to be slightly more than $111 billion, an increase of 82% from the previous year.

However, NVIDIA’s management estimates that, in the long run, its total potential market opportunity could reach $1 trillion, indicating significant room for further business growth. Of this $1 trillion end-market opportunity, the company believes $100 billion comes from the gaming business and $300 billion from the data center sector. For brevity, I will focus on discussing these two parts.

Secondly, various catalysts in the gaming industry

NVIDIA’s gaming division generated $10.4 billion in revenue in fiscal 2024, a 15% year-over-year increase. There are several impressive catalysts in the gaming sector that explain why NVIDIA sees a $100 billion market opportunity here.

The first is the demand for gaming hardware, such as discrete GPUs. Market research firm TechNavio predicts that the gaming GPU market will grow at an annual rate of over 16% from 2022 to 2027, with added revenue exceeding $30 billion during this period. According to Jon Peddie Research, NVIDIA controls 80% of the discrete GPU market, putting the company in a strong position to capture a large part of this growing revenue opportunity.

The second catalyst for NVIDIA’s discrete GPUs will be the rapid adoption of artificial intelligence personal computers. This is because advanced AI PCs are expected to be supported by dedicated GPUs sold by NVIDIA, enabling them to run AI workloads locally. NVIDIA has already launched AI-focused PC graphics cards, entering this emerging market early, which could pave the way for steady growth in this sector.

Meanwhile, cloud gaming could present another opportunity for NVIDIA. According to third-party estimates, the cloud gaming market was worth only $5 billion in 2023. However, it is expected to generate annual revenue of $143 billion by 2032. As of 2023, NVIDIA’s GeForce Now cloud gaming service is estimated to have 9 million users, holding a market share of 30%.

In the long run, if NVIDIA continues to maintain its share in this potentially lucrative market, it could see significant growth in gaming revenue. All this indicates that the company’s potential opportunities in the gaming sector are indeed considerable, and its dominant position in this market should enable it to see significant revenue growth over last year’s levels.

Furthermore, a $300 billion market

NVIDIA’s data center business generated a record $47.5 billion in revenue in fiscal 2024, up 217% year-over-year. Like the gaming sector, NVIDIA also holds a huge market share in this segment, meaning it is well-positioned to fully capitalize on this $300 billion potential opportunity.

Some analysts claim that NVIDIA’s share of the data center GPU market is as high as 98%. Even though this may seem optimistic, a closer look at the recent performance of NVIDIA’s data center GPU competitors makes it clear that the company holds a dominant position in this field. AMD expects its data center GPU sales to reach at least $3.5 billion this year, while NVIDIA’s revenue in this area was more than ten times that of AMD last fiscal year.

More importantly, NVIDIA will greatly enhance its strength in the data center GPU sector with the upcoming launch of the Blackwell processor. The company claims that its next-generation data center processors will have at least 2.5 times the computing power of the current generation Hopper. Considering that the upcoming chips are expected to be competitively priced compared to the existing flagship H100 processor (priced between $30,000 and $40,000), they may help NVIDIA maintain a strong position in this profitable market.

All these explain why the Japanese investment bank Mizuho expects NVIDIA’s AI revenue to soar to $280 billion by 2027. Therefore, it is very likely to take a larger share of the $1 trillion revenue opportunity it claims to possess.

This is why it is still a good time for investors to buy this high-flying AI stock.

How to invest in NVIDIA?

NVIDIA’s current price-to-earnings ratio is 35 times, which is attractive, lower than its five-year average expected price-to-earnings ratio of 39 times. Therefore, investors can invest according to their own strategies through the BiyaPay App multi-asset trading platform, without the need for overseas bank accounts, directly within the platform to trade, real-time deposits and withdrawals; it also supports the exchange of digital currencies for US dollars/Hong Kong dollars, withdrawals to Charles Schwab or other securities for investment trading, making it fast and unlimited, which is indeed convenient. So, everyone can invest according to their needs.

All in all, it can be said that NVIDIA is “the most important stock on Earth.” (Just a little brag)

Meanwhile, Cantor Fitzgerald analysts maintain a hold rating on Nvidia with a target price of $1200, noting the ongoing strong momentum in artificial intelligence as the company’s driving force and expect performance to grow significantly once again.

So, let’s look forward to its next frenzy!