nvidia's ai gamble: can growth defy the skeptics?

2025-02-21 nvidia

silicon valley, Friday, 21 February 2025.
analysts are questioning nvidia’s heavy reliance on ai for sustained stock growth. the chipmaker’s fourth-quarter results, expected to reveal a 73% year-over-year revenue increase to $38.32 billion, will be critical. despite booming demand and overwhelmingly positive analyst ratings, concerns linger. can nvidia maintain its dominance as competition intensifies and tech spending potentially shifts? the report on february 26 will either confirm investor confidence or expose vulnerabilities in nvidia’s ai-centric strategy. one analyst has a ‘hold’ rating.

analyst outlook and price targets

Analysts are generally bullish on Nvidia, with most issuing ‘buy’ or equivalent ratings [1]. Visible Alpha tracked 18 analysts, with all but one recommending to buy [1]. The consensus price target is approximately $175, suggesting a 26% upside from recent intraday prices [1]. Wedbush and Oppenheimer analysts have reiterated price targets of $175, citing strong demand for Nvidia’s advanced chips due to increased AI infrastructure spending by Big Tech [1]. UBS analysts have a higher price target of $185, anticipating increased sales from Nvidia’s Blackwell line due to supply chain improvements [1].

blackwell gpu demand and it spending

Wedbush analysts highlight strong ongoing demand for Nvidia’s Blackwell GPU, despite concerns about DeepSeek [2]. Demand surpasses supply, and AI enterprise clients show no signs of slowing down or changing strategies [2]. They are eager to secure their positions for Nvidia’s next-generation chips [2]. Wedbush projects that 10% to 15% of IT budgets will be allocated to AI in 2025 [2]. Seven major tech companies are expected to increase capital expenditures by $100 billion, reaching a total of $325 billion by 2025 [2].

Nvidia and AMD form a near-duopoly in the AI chip market [7]. Nvidia held 90% of the discrete GPU market in the third quarter of 2024, while AMD held only 10% [7]. TechInsights estimates Nvidia accounted for 98% of data center GPU shipments in 2023 [7]. Nvidia’s data center market generated 88% of its revenue in the latest quarter [7]. AMD controlled 38% of the x86 CPU market in the first quarter of 2025, while Intel held 60% [7]. Nvidia’s proprietary CUDA platform limits AMD’s appeal to AI customers [7].

financial performance and future growth

Nvidia’s revenue grew by 126% in fiscal year 2024 due to generative AI applications [7]. In comparison, AMD’s revenue decreased by 4% in 2023 but increased by 14% in 2024 [7]. AMD’s data center revenue increased by 94% in 2024, accounting for 49% of its total revenue [7]. Analysts expect Nvidia’s revenue and EPS to grow at a compound annual growth rate (CAGR) of 57% and 65% from fiscal years 2024 to 2027 [7]. They also expect AMD’s revenue and EPS to grow at a CAGR of 20% and 73% during the same period [7].

telecommunications and ai integration

Telco firms are leading enterprise AI integration, reporting revenue increases, cost reductions, and widespread AI adoption [4]. Nvidia’s survey indicates a shift from customer service to network infrastructure in the telecommunications sector [4]. 84% of respondents reported that AI is increasing annual revenue, and 77% said AI helped reduce annual operating costs [4]. 60% cited increased employee productivity as the biggest benefit of AI [4]. Two-thirds of telecommunications companies plan to increase AI infrastructure spending this year [4].

Bronnen

nvidia stock analysis