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As Donald Trump begins his second presidential term, market participants’ clamor for the “Trump Trade” is growing stronger. Marked by expectations around deregulation, tax cuts, infrastructure spending, and a generally pro-business stance, this phenomenon has triggered stocks connected to Trump’s policy agenda to surge.
One sector that has been traditionally linked with Democrats stole the show at Trump’s inauguration. From Jeff Bezos to Mark Zuckerberg to Satya Nadella to Sundar Pichai, the “who’s who” of the tech world were present as Trump took oath as the 47th president of the United States.
Further, following positive assertions about artificial intelligence (AI) on his campaign trail, the $500 billion Stargate initiative is aimed at further bolstering U.S. leadership in AI. And unsurprisingly, chip giant Nvidia (NVDA) is a key player in this initiative alongside Microsoft (MSFT), Arm (ARM), Oracle (ORCL), OpenAI and Masayoshi Son-led SoftBank (SFTBY).
About Nvidia Stock
Founded in 1993, Nvidia (NVDA) is a leader in specialized AI semiconductors, and the company also supplies software to complement its hardware. More specifically, Nvidia designs and sells graphics processing units (GPUs) for the gaming and professional markets, and system-on-a-chip (SoC) units for the mobile computing market.
NVDA stock has been an outperformer over the past year, gaining 142%.
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 its fiscal 2025. Revenue came in at $35.1 billion, beating estimates of $33.2 billion, and its earnings per share of $0.81 beat estimates of $0.75. This marked the eighth consecutive quarter of earnings beats from the company.
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.
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 93.8% and 189.8%, compared to the sector medians of 5.44% and 8.21%.
Growth Drivers
Nvidia remains at the forefront of the AI and high-performance computing revolution, cementing its dominance with groundbreaking innovation. Under the Stargate initiative, the company is poised to play a pivotal role in deploying and operating AI systems, leveraging its comprehensive AI hardware and software stack to meet the program’s demands. This development not only addresses investor concerns over a potential slowdown in AI spending, but also reignites optimism about Nvidia’s growth trajectory.
At the heart of Nvidia’s technological advancements is the H100 Tensor Core GPU, hailed as the world's most powerful chip. This innovation is central to the company’s Blackwell GPU platform, which represents a significant leap in AI and high-performance computing. Blackwell delivers up to 2.5 times faster AI training and 15 times higher inference speeds compared to its predecessor, Hopper. With configurations supporting both x86 and ARM architectures, the platform is designed for widespread adoption across diverse computing ecosystems. Looking ahead, Nvidia’s Rubin platform, expected in 2025 or 2026, is anticipated to push the boundaries even further.
Nvidia’s AI dominance is underpinned by its 90% share in the AI accelerator market, driven by soaring demand for generative AI and accelerated computing. The company projects a long-term market opportunity of $100 trillion, spanning industries such as healthcare, robotics, and accelerated computing. For instance, the healthcare sector alone is estimated to present a $10 trillion opportunity, with AI factories accounting for a potential $100 billion segment. Nvidia’s positioning is further bolstered by hyperscalers like Amazon (AMZN), Microsoft, Google (GOOGL), and Meta (META), which are expected to increase their data center capital expenditures by 50% year-over-year, from $200 billion to $300 billion, providing a substantial growth runway.
Beyond AI, Nvidia is reinvigorating its presence in the gaming market. The company has launched its GeForce RTX AI PCs, featuring enhanced AI-driven capabilities that elevate gaming, coding, image generation, and video editing experiences. These systems signify Nvidia’s continued commitment to its core gaming audience while incorporating cutting-edge technologies.
Nvidia’s hardware-software integration is a cornerstone of its success. Platforms like CUDA, Nvidia AI, and Omniverse facilitate seamless AI scalability and efficiency. For example, the company’s Inference Microservices drastically reduce AI deployment times from weeks to mere minutes. Additionally, the H100 GPUs are optimized for applications spanning data centers, autonomous systems, and sovereign AI projects. Nvidia is also preparing to launch the MI300X processor, designed to further enhance machine learning performance.
Nvidia’s relentless innovation and strategic positioning across AI, gaming, robotics, and cloud computing ensure that it remains a critical player in shaping the future of technology. With its robust product pipeline, strong market share, and comprehensive ecosystem, the company is well-equipped to sustain its leadership and capture emerging opportunities in the rapidly evolving technology landscape.
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 $176.90, indicating upside potential of about 20.3%.
Out of 43 analysts covering NVDA stock, 36 have a “Strong Buy” rating, three have a “Moderate Buy” rating, and four have a “Hold” rating.
