NVDA Stock Watch: How Nvidia Could Generate $200 Billion in Revenue This Year

The stock most identifiable within the artificial intelligence (AI) trade has been Jensen Huang-led Nvidia NVDA. The Santa Clara, California-based chip giant has witnessed a scorching rally, rising 172% over the past year and an eye-popping 2,194% in the last five years. This has led to the company commanding a gargantuan market capitalization of $3.66 trillion, second only to iPhone maker Apple AAPL.

Nvidia is not resting on its laurels. The company continues to innovate, with one of its latest accomplishments being the unveiling of the next generation of its GeForce RTX GPUs. Commenting on it, Huang said, “Blackwell, the engine of AI, has arrived for PC gamers, developers and creatives. Fusing AI-driven neural rendering and ray tracing, Blackwell is the most significant computer graphics innovation since we introduced programmable shading 25 years ago."

Analysts remain enthused about this most recent development around the company with projections of revenues of $200 billion from this launch alone. However, there remain other significant drivers for the stock as well, and any fresh investment into it could still lead to material upside for new investors. Let’s have a closer look.

Solid Fundamentals

As Nvidia has emerged as a key player in the chip industry, its revenue and earnings have also soared. Over the past 10 years, the company clocked revenue and earnings CAGRs of 37.84% and 59.72%, respectively. 

Nvidia continued on its spree of reporting record quarterly revenues in the third quarter of 2024. Revenue came in at $35.1 billion, beating estimates of $33.2 billion, and earnings per share of $0.81 beat estimates of $0.75. Notably, this marked the eighth consecutive quarter of earnings beats from the company.

Further, analysts are forecasting that Nvidia will continue to outpace the industry in terms of revenue and earnings growth with forward revenue and earnings growth rates pegged at 93.49% and 189.58% compared to the sector medians of 5.62% and 8%, respectively.

Net cash from operating activities rose to $17.6 billion compared to $7.3 billion in the year-ago period. Overall, Nvidia exited the quarter with a cash balance of $38.5 billion with no short-term debt on its books.

Growth Drivers

Nvidia is maintaining its dominance in the AI chip market, benefiting from the increasing demand for generative AI and accelerated computing. The major hyperscalers — Amazon AMZN, Microsoft MSFT, Google GOOGL, and Meta META — are expected to collectively increase their data center capital expenditures from $200 billion to $300 billion year-over-year, a growth rate of 50%, according to Morgan Stanley. With Nvidia holding a 90% market share in AI accelerators, the company is poised to capture the majority of this spending, driving significant revenue growth.

Meanwhile, Nvidia’s current Blackwell GPU platform delivers notable advancements in AI and high-performance computing. Early benchmarks show it offers up to 2.5 times faster performance in AI training and up to 15 times higher inference speeds compared to its Hopper architecture predecessor. These GPUs are designed to suit various configurations, including air-cooled, liquid-cooled, x86, and ARM-based systems, ensuring broad adoption across enterprises and data centers. The company is also preparing to launch its next-generation Rubin platform in 2025 or 2026, which is expected to further strengthen its market leadership.

In addition to its hardware, Nvidia’s competitive edge lies in its integrated software ecosystem. The CUDA platform and InfiniBand networking enable efficient scalability for AI development. Its software tools, such as Nvidia AI and Omniverse, simplify AI deployment and help retain customers. Nvidia Inference Microservices, introduced recently, enable the quick deployment of AI models at scale, reducing deployment times from weeks to minutes and working seamlessly across Nvidia's massive GPU base.

Further, Nvidia’s AI accelerators, including its H100 Tensor Core GPUs, play a critical role in driving innovation in data centers, edge computing, autonomous vehicles, and other applications. These GPUs, currently the fastest on the market for handling AI and high-performance workloads, are integral to developing sovereign AI systems for enterprises and governments. The company is also set to release the MI300X processor to further enhance machine learning capabilities.

Management remains optimistic about sustained growth through 2025 and beyond, driven by the rising adoption of accelerated computing, expanding generative AI applications, and strong enterprise and internet sector growth. Nvidia’s comprehensive offerings, combining leading-edge hardware with robust software support, position it well to meet the growing demand for AI-driven solutions across industries.

Analyst Opinions on NVDA Stock

Overall, analysts continue to remain bullish on Nvidia stock. The consensus rating is a "Strong Buy,” with a mean target price of $175.55, indicating upside potential of about 25.3%.

Out of 43 analysts covering NVDA stock, 36 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, and 4 have a “Hold” rating.

On the date of publication, Pathikrit Bose 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.

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