After a sluggish start to 2025, Nvidia (NVDA) stock has come roaring back, reflecting improving market sentiment.
Just a few months ago, the narrative surrounding Nvidia was far more cautious. Earlier in the year, the stock faced mounting pressure as concerns grew over potential demand headwinds for its high-performance GPUs. Notably, the launch of DeepSeek’s cost-effective R1 large language model (LLM) in January raised concerns that Nvidia’s premium-priced chips might lose their appeal. Adding fuel to the fire, new U.S. government restrictions on GPU shipments to China wiped out billions in potential revenue.
Overall, Nvidia’s early 2025 narrative was one of headwinds and caution.
But the tide has turned. In just three months, Nvidia stock has surged 51%, making it the first publicly traded company to briefly surpass a staggering $4 trillion market cap. As macroeconomic fears have eased, so has the selling pressure on tech, including Nvidia. Further, the company’s dominance across the AI ecosystem, including hardware, software, and networking, puts it in a solid position to capitalize on exploding AI infrastructure demand.
Nvidia’s recent financial performance demonstrates the robustness of its fundamentals. In its latest quarter, the company reported $44 billion in revenue, representing a 69% year-over-year increase. The Data Center segment led the charge with $39 billion in sales, up 73%, driven by the accelerating demand. Further, the shift from AI training to inference and the rapid buildout of AI factories around the globe augurs well for growth.
The company’s new Blackwell platform is now the key growth catalyst. In Q1, Blackwell chips contributed nearly 70% of Data Center compute revenue, marking the fastest ramp in Nvidia’s history. With its innovative GB200 NVL systems, Nvidia is delivering AI compute at an unprecedented scale and efficiency, achieving the lowest cost per inference token in the industry.
Nvidia’s resilience shows in other areas as well. Networking has emerged as a powerful second growth engine, generating $5 billion in quarterly revenue, a 64% quarter-over-quarter increase. Technologies like NVLink and Spectrum-X are now essential for AI infrastructure, enabling the high-bandwidth, low-latency performance required for next-generation agentic AI, which aims to surpass generative models by facilitating autonomous reasoning and decision-making.
Outside the Data Center segment, Nvidia continues to gain traction across Gaming, Automotive, and Robotics. Gaming revenue hit a record $3.8 billion, up 48% sequentially. Automotive revenue rose 72% year-over-year, reflecting strong demand for self-driving and innovative cockpit platforms. Nvidia’s tech is expected to power the next-generation gaming and AI-powered PCs, expanding its total addressable market in meaningful ways.
Nvidia’s momentum shows no signs of slowing down. The tech giant recently shared an upbeat forecast for its second quarter, projecting $45 billion in revenue, reflecting a solid 50% increase compared to the same period last year. This guidance shows the continued strength of its Data Center segment, which remains a key growth driver even amid geopolitical uncertainty. A big part of that resilience comes from the company’s latest innovation, the Blackwell platform, which is expected to help Nvidia maintain global demand despite regional headwinds.
Wall Street is optimistic about NVDA’s prospects. Analysts maintain a “Strong Buy” consensus rating on Nvidia. Moreover, the Street high price target of $250 suggests significant upside potential for NVDA stock over the next 12 months.
While Nvidia’s valuation might raise eyebrows at first glance, especially with its forward price-earnings ratio hovering around 40x, the premium appears justified. The company is expected to deliver robust earnings growth of 36.5% in fiscal 2026, followed by an additional 32.3% in fiscal 2027. When you factor in that level of sustained profitability, Nvidia starts to look far more reasonably priced.
For long-term investors, the answer leans heavily toward “Hold” or even “Buy.” Nvidia continues to deliver impressive growth and has dominant positioning in the AI ecosystem. While geopolitical risks remain, continued demand for its products and innovation make NVDA a compelling investment.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com