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Nvidia (NVDA) is among the hottest stocks on the planet. Valued at a market capitalization of over $3.5 trillion, the semiconductor giant is also one of the largest companies in the world and is at the epicenter of the artificial intelligence (AI) megatrend.
While several companies are eyeing the highly disruptive market, Nvidia has been quietly building its AI empire since 1999. Remember when the company’s GPUs or graphics processing units were just for gaming? Well, the Big Tech giant has transformed these chips, which now form the backbone of AI, and this innovation is paying off spectacularly.
According to industry experts, Nvidia’s H100 and A100 chips are the gold standard for AI processing, allowing the company to enjoy a market share larger than 90%. In recent years, Nvidia has left competitors such as Advanced Micro Devices (AMD) and Intel (INTC) behind.
In addition to its hardware, Nvidia’s Omniverse platform allows companies to optimize operations by leveraging AI-driven insights, allowing it to gain traction in sectors such as logistics and manufacturing.
Saxo Provides Bullish Outlook for Nvidia Stock
While some investors might worry about Nvidia's valuation, consider this: We're still in the early innings of the AI revolution. As AI applications expand across industries, Nvidia's position as the essential "picks and shovels" provider of the AI gold rush becomes even more valuable.
According to a report from Saxo Bank, Nvidia’s outperformance will continue in 2025 due to robust demand for its revolutionary Blackwell chip. Apparently, this chip has showcased a 25x increase in the performance of AI calculations per unit of energy consumed compared to the H100 generation.
Saxo explains, “With the intensifying AI arms race as no giant or even government wants to be left behind, and as AI data centre electricity costs have soared, the insatiable demand for the more powerful and yet less power-hungry Blackwell chips sees Nvidia taking the crown as the most profitable company of all time.”
Saxo is extremely bullish on NVDA stock and expects it to trade at more than $250 per share, up from the current price of $136. If Nvidia surpasses the $250 threshold, the chip stock will be valued at a market cap of over $6.2 trillion, making it 2x more valuable than Apple (AAPL).
Is NVDA Stock Overvalued?
Nvidia shares have returned 90% in the past 52 weeks and are up 2,227% in the past five years. If we zoom out further, NVDA stock has returned 27,692% in the last decade and a monstrous 70,855% over 20 years. This means that a $1,000 investment in NVDA stock in December 2004 would be worth close to $800,000 today.
Given that the AI race is still nascent, Nvidia’s growth story is far from over. Analysts tracking the tech stock expect sales to rise from $60.9 billion in fiscal 2024 to $129 billion in 2025, $195 billion in 2026, and $235 billion in 2027. Comparatively, adjusted earnings per share are forecast to expand from $1.29 per share in 2024 to $2.95 in 2025, $4.43 in 2026 and $5.58 in 2027.
Priced at 31x forward earnings, NVDA stock is still reasonably valued, given its growth estimates. Out of the 43 analysts covering NVDA stock, 36 recommend “Strong Buy,” three recommend “Moderate Buy” and four recommend “Hold.” The average target price for Nvidia stock is $173, indicating upside potential of 25% from current levels.
