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Shares of semiconductor designer Nvidia (NVDA) have been on an absolute tear, rising 134.8% in 2024, 179.5% in the last 12 months, and a whopping 25,049% in the past decade. It's been a record-setting 2024 for the AI chip giant, too; earlier this year, Nvidia briefly became the largest company in the world, just months before the stock registered the largest market cap decline in U.S. history to start the month of September.
NVDA currently trades 17.4% below all-time highs. Let’s see where Nvidia stock will be in one year, and whether it makes sense to invest in the tech giant at the current valuation.
Nvidia Continues to Grow Rapidly
Valued at $2.85 trillion by market cap, Nvidia (NVDA) deals in programmable graphics processor technologies, and is at the epicenter of the artificial intelligence (AI) megatrend. Its chipsets, or graphics processor units (GPUs), power AI platforms, a market where Nvidia commands an 80% market share.
In fiscal Q2 of 2025 (ended in July), Nvidia reported revenue of $30 billion, an increase of 122% year over year. In the three quarters before Q2, Nvidia’s revenue growth reached more than 200% year over year. The company’s net income more than doubled to $16.67 billion, or $0.67 per share, compared to $6.18 billion, or $0.25 per share, in the prior-year period.
Nvidia’s data center business is the key driver of its top-line growth. This segment, which includes AI processors, rose 154% to $26.3 billion in Q2, accounting for 88% of total sales and surpassing estimates of $25.24 billion. Around $3.7 billion of its data center sales were attributed to Nvidia’s networking products.
Nvidia generates most of its data center sales from industry giants such as Microsoft (MSFT), Meta (META), Amazon (AMZN), Tesla (TSLA), and Alphabet (GOOG) (GOOGL), all of whom are investing heavily in the AI segment. These customers are now awaiting Nvidia’s next-generation Blackwell chip, which should help them better train and deploy their AI models.
Previously, Nvidia’s gaming business was its key business segment. Due to increased PC gaming card shipments, its gaming sales rose 16% to $2.9 billion in fiscal Q2, higher than estimates of $2.7 billion.
The semiconductor giant also sells chips to high-end graphics designers, automotive and robotics companies, and other high-tech industries. In Q2, its professional visualization business rose 20% to $454 million, while automotive and robotics sales stood at $346 million.
At 40.83 times forward adjusted earnings, NVDA trades at a discount to its own five-year historical average valuation. Consensus forecasts call for EPS to more than double in fiscal 2025, with 40% adjusted EPS growth projected for fiscal 2026 - suggesting NVDA stock is reasonably priced at current levels.
What's the Forecast for Nvidia Stock?
Last week, investment bank William Blair initiated coverage on Nvidia stock with an “outperform” rating. According to the investment firm, Nvidia’s data center sales are on track to more than double in fiscal 2025 after tripling in 2024. Moreover, it expects Nvidia to maintain its lead in AI, which should drive growth in revenue and earnings.
On Sept. 11, Goldman Sachs analyst Toshiya Hari reiterated a “conviction buy” rating on Nvidia, with a 12-month target price of $135. Hari explained that companies will spend $1 trillion to build data centers in the upcoming decade, which would be a major driver for Nvidia. Further, improving efficiency rates for Nvidia customers should help the company maintain demand, as CEO Jensen Huang expects hyperscale customers to generate $5 in rental revenue for every $1 spent on Nvidia’s infrastructure. Hari also emphasized that Nvidia’s competitive moat, large installed base of GPUs, and ability to integrate its hardware with software make it a compelling investment.
Finally, analyst Atif Malik from Citi reiterated a “Buy” rating for Nvidia with a target price of $150, and Bank of America's Vivek Arya also backed a “Buy” rating. The consensus on NVDA is a “strong buy” overall among 40 analysts in coverage.
In total, 35 recommend “strong buy,” two recommend “moderate buy,” and three recommend “hold.” The 12-month average target price for NVDA stock is $149.46, indicating an expected upside potential of 29.5% from current levels. The Street-high price target of $200, set by Hans Mosesmann of Rosenblatt Securities, implies upside potential of more than 73%.
On the date of publication, Aditya Raghunath 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. For more information please view the Barchart Disclosure Policy here.
