Should You Buy Nvidia Before 2025? The Evidence Is Piling Up, and It Says This.
Nvidia's stock has surged nearly 190% this year, driven by its dominance in the booming AI industry. The company reported record revenues, reaching billions in the recent quarter, and maintains high profit margins over 70%. Despite potential margin pressures during the upcoming Blackwell architecture launch, Nvidia is positioned for significant growth as the AI market expands. Analysts suggest that investing in Nvidia before 2025 could be beneficial, as the company is expected to continue its upward trajectory in the evolving tech landscape.
Nvidia (NVDA -2.55%) has roared to the top of the charts when it comes to stock performance this year. The shares are heading for an increase of nearly 190% for the top performance in the Dow Jones Industrial Average, the second-best performance in the Nasdaq 100, and the third-best performance in the S&P 500. And the reason for such gains is clear: Nvidia has built an empire in one of today's hottest industries. I'm talking about artificial intelligence (AI), a market forecast to climb from $200 billion today to $1 trillion by the end of the decade.
The tech giant makes the powerful chips key to the development of AI projects along with a whole portfolio of related products and services. And this has helped revenue climb to record levels. It reached $35 billion in the recent quarter, a higher level than a full year of revenue just two years ago.
Considering the company's momentum, should you buy Nvidia before 2025? Evidence is piling up, and it's favoring one particular answer.
Image source: Getty Images.
The creation of CUDA and a shift to artificial intelligence
But before we get to that, let's look at Nvidia's story so far. This company wasn't always an AI giant. In their earlier days, Nvidia's graphics processing units (GPUs) powered video games -- then, as it became clear their ability to handle many tasks at once would be useful in other areas, Nvidia made this possible. The company launched the parallel computing platform CUDA, and the GPU expanded its reach, soon becoming the star of the AI revolution.
In most of Nvidia's recent quarters, the company's earnings have climbed in the triple digits. In the latest quarter, that growth slowed to the double digits -- but that's not surprising considering comparison quarters have become quite difficult. For example, in the third quarter of last year, revenue already soared to $18 billion. In the recent third quarter, it advanced 94% from that level.
Importantly, this story isn't only about revenue, but it's also about profitability. Nvidia has shown its ability to generate high profit on sales, with a gross margin of more than 70%. And the company even predicts these wide margins will continue through the launch of its new Blackwell architecture in the coming weeks and months. This is impressive since product releases come with extra expenses and companies generally aren't at their most cost-efficient levels during the initial stages.
Why you may hesitate to buy Nvidia now
Now let's consider whether you should buy this high-flying stock before the new year. One reason you may hesitate is the fact that, during the launch period, Nvidia's margins may remain strong, but the company still will go through a time of transition. Nvidia said getting the launch just right will weigh somewhat on gross margin, bringing it down to the low-70% range from the mid-70s. This, along with the fact that Nvidia surged in 2024, may prompt investors to turn to other stocks with more potential for explosive growth right away.
That said, even after Nvidia's impressive earnings and share price performance in recent quarters, the company may be in the early days of its growth story. As I mentioned earlier, the entire AI market is set to take off over the coming years. And Nvidia chief Jensen Huang has emphasized many times that over the coming four or five years, about $1 trillion must be spent to upgrade data centers as part of this shift to accelerated computing.
Meanwhile, Nvidia's upcoming Blackwell launch along with future chips -- that it's pledged to update annually -- should help fuel these developments. And that means a whole new era of growth might be just ahead.
What the evidence shows
Considering this, the evidence that's piling up shows us it's a great idea to get in on Nvidia as soon as possible -- to benefit from this new wave of growth that's starting as early as this current quarter. Nvidia predicts it will beat its forecast of several billion dollars of Blackwell revenue in the period.
Of course, even a purchase of Nvidia after the new year clearly could deliver rewards down the road. Stock performance over the short term generally won't have much of an impact if you hold on for the long term -- and that's the best way to invest. So, you don't absolutely have to rush out and buy Nvidia stock right now to avoid missing out. But, if you happen to be shopping for stocks before the end of 2025, evidence suggests Nvidia is a fantastic one to add to your list.