The S&P 500 is up 26% this year. Social media giant Meta Platforms (NASDAQ: META) has posted 62% growth on a remarkable surge in users and revenue. Neither is close to Nvidia’s (NASDAQ: NVDA) advance, up 175% to a market cap-leading $3.4 billion this year.
Nvidia’s 2025 performance is based on whether AI is the most significant advance in tech in decades or a lesser product with an effect closer to the internet or PC. Many analysts think big tech companies like Microsoft (NASDAQ: MSFT) have invested too much in AI, and their earnings will suffer until it is clear AI will drive their revenue up by double digits and justify expenditures well into the billions of dollars. Nvidia’s fate is based on big tech’s need to stay in an arm’s race, the goal of which is AI dominance.
Public corporations are not the only companies that drive AI demand. Private capital has helped OpenAI push its value to $157 billion. Elon Musk’s xAI recently got a valuation of $50 billion. He raised $6 billion recently, much of it to create a Tennessee-based server center, which will be built from 100,000 Nvidia chips.
One aspect of the AI arms race that favors Nvidia is that there is no clear leader in the industry, and a dozen companies are competing for that lead. Some, like Microsoft, are public, while the private ones appear to have a nearly infinite flow of capital from venture capitalists. Access to Nvidia chips is critical to the future of all of these.
The most obvious marker of whether Nvidia’s stock will grow or start to fall sharply in price is whether it can continue to double earnings quarterly year over year. In the most recent quarter, EPS rose 111% to $.78, as revenue rose 94% to $35.1 billion.
Take Charge of Your Retirement In Just A Few Minutes (Sponsor)
Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance—and SmartAsset’s made it easier than ever for you to connect with a vetted financial advisor.
Here’s how it works:
- Answer a Few Simple Questions. Tell us a bit about your goals and preferences—it only takes a few minutes!
- Get Matched with Vetted Advisors Our smart tool matches you with up to three pre-screened, vetted advisors who serve your area and are held to a fiduciary standard to act in your best interests. Click here to begin
- Choose Your Fit Review their profiles, schedule an introductory call (or meet in person), and select the advisor who feel is right for you.
Why wait? Start building the retirement you’ve always dreamed of. Click here to get started today!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.