Publication date: May 30, 2025

Nvidia came out with its quarterly update Wednesday night after the market closed. The company's growth slowed but did exceed expectations. Nvidia, meanwhile, has become one of the most influential technology companies in the world. Once known as a producer of graphics cards for gamers, today, Nvidia is the backbone of the artificial intelligence industry. In this article, we look at how Nvidia gained this position, what the current situation is, and how analysts assess the future. Moreover, we come up with our analysis for the short and long term.

Brief history: from graphics pioneer to AI giant

Nvidia was founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem to dramatically improve graphics performance in computers. The company broke through with the introduction of the GeForce 256 in 1999 - the first chip referred to as a "GPU" (graphics processing unit).

Throughout the 2000s, Nvidia continued to build its reputation within gaming, professional visualization, and high-performance computing. But the big turnaround came with the rise of AI and deep learning. Nvidia's GPUs proved ideally suited for training neural networks, and data centers worldwide switched to Nvidia hardware.

Today, Nvidia not only supplies the gaming market with graphics chips, but also provides powerful AI infrastructure to companies such as Microsoft, Google, Meta, and Amazon.

The current situation

Nvidia has firmly positioned itself in the fast-growing AI market. The introduction of the H100 chip, designed for AI training, has led to unprecedented revenue growth. In fiscal year 2024, Nvidia posted record revenue of $60.9 billion, nearly double that of the previous year. Net profit even grew more than 500% to over $29 billion. In the first quarter of this year, the company posted revenue of
$44.1 billion and net profit of $18.8 billion. For the current quarter, Nvidia expects revenue of $45 billion.

With a market share of around 80 - 90% in the AI-GPU market, Nvidia is currently without any real competition. On the software front, the company is also building a solid ecosystem, including through CUDA, Omniverse, and DGX Cloud.

NVDA's share price reflects this dominance: due to its massive rise in recent years, Nvidia is now among the five largest publicly traded companies in the world.

Analyst expectations

Analysts at well-known banks are positive about Nvidia, but not without reservations. Below is a summary of the main expectations and risks:

Positive signals

• Structural AI demand: Analysts at Goldman Sachs, Morgan Stanley, and others expect demand for AI hardware to continue until at least 2026.
  
  
• Technological lead: Nvidia is 1-2 years ahead of competitors such as AMD and Intel. Thereby, the software ecosystem provides a strong competitive barrier.
  
  
• Earnings growth: Expectations are for 30-40% earnings growth per year through 2026.

Risks.

• High valuation: With a P/E ratio of more than 60, the stock is prone to setbacks.
  
  
• Geopolitical uncertainties: Restrictions on chip exports to China and tensions around Taiwan may pose risks.
  
  
• Emerging competition: AMD, Intel, and new players like Groq are developing alternatives to Nvidia's chips, although the technology gap is still significant.

What is our expectation from Nvidia?

Nvidia is a prime example of how a technology company can move with and even shape megatrends. For the long term, our view is very positive,  and the price target is $225. For the short term, it is currently uncertain. This is true for many stocks and stock indices. This has everything to do with the unpredictable policy from the U.S. and its major influence on prices. The most probable scenario for the short term is to go back to $125 for a while and then pick up the road to $185. This is the next step towards the price target of $225.

Below is the chart of Nvidia from October 2024 with the current most likely scenario plotted.

Conclusion

Nvidia is performing strongly, but expectations are also high because of its excellent position in a huge growth market. You can consider taking the stock into your portfolio at the time the price corrects to around $125. At a closing level above $145, the price has broken out, and you can also consider buying the stock.

Disclaimer: Investing involves risk. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.