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Key Takeaways:
- Nvidia delivered a record Q1 revenue of $44 billion, up 69% year-over-year, driven by strong demand for AI infrastructure.
- The chipmaker’s Blackwell architecture is ramping faster than any previous generation, with customers deploying nearly 1,000 NVL72 racks per week.
- Inference demand is exploding with reasoning AI models requiring 100-1,000x more compute than traditional chatbots.
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After a staggering 28,650% gain over the past decade, Nvidia (NVDA) has transformed from a graphics card company into the undisputed leader of the artificial intelligence revolution.
With a market capitalization approaching $4 trillion, the question facing investors today isn’t whether Nvidia has been successful, but whether NVDA stock can continue delivering outsized returns from these elevated levels.
Nvidia’s latest quarterly results suggest the AI boom is far from over, with record revenue and guidance pointing to continued explosive growth ahead.
Let’s examine why Nvidia’s remarkable run may still have room to grow and what factors could drive the next phase of the company’s evolution.
1. Nvidia is Bullish on Strong Inference Demand
Nvidia’s latest results revealed a fundamental shift in AI workloads that’s driving unprecedented compute demand.
The emergence of reasoning AI models like DeepSeek-R1 has created what CEO Jensen Huang called “a step-function surge in inference demand” that requires massive scale computing infrastructure.
Unlike traditional chatbots that generate simple responses, reasoning AI models think through problems step-by-step, often requiring “hundreds to thousands of times more tokens per task than previous one-shot inference.”
This computational intensity is driving explosive growth in token generation across major platforms. Microsoft alone processed over 100 trillion tokens in Q1, representing a fivefold increase year-over-year.
This exponential growth in inference workloads enabled NVDA stock to increase its revenue by 69% year over year to $44 billion in fiscal Q1.
Hyperscale customers are rapidly deploying the tech giant’s GB200 NVL72 systems. Major cloud providers are each deploying nearly 1,000 NVL72 racks weekly, with each rack containing 72,000 Blackwell GPUs and delivering 130 terabytes per second of bandwidth.
This shift toward inference-heavy workloads represents a massive market expansion opportunity, as reasoning AI enables entirely new categories of applications that weren’t possible with previous generation models.
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2. Nvidia Stock Should Benefit from Sovereign AI
One of Nvidia’s most exciting growth vectors is the emerging sovereign AI market, where countries are building national AI infrastructure to maintain data sovereignty and develop indigenous AI capabilities.
CFO Colette Kress described this as potentially “approaching over several, several years, could be close to $1 trillion” in market opportunity.
Recent announcements demonstrate the scale of these investments. President Trump’s Middle East tour resulted in a 500-megawatt AI infrastructure project in Saudi Arabia and a 5-gigawatt AI campus in the UAE.
Similar initiatives are underway across Europe, Asia, and other regions as nations recognize AI as critical infrastructure.
The sovereign AI trend is driven by recognition that “every country will need their own ability to have their AI within their country,” using their own language, culture, and data.
This creates demand for localized AI factories and infrastructure that goes far beyond traditional cloud computing deployments.
Nvidia is uniquely positioned to capitalize on this trend through its full-stack AI platform, spanning chips, software, and networking infrastructure.
The semiconductor behemoth is partnering with governments and regional cloud providers to build these national AI capabilities, creating a new category of customers beyond traditional hyperscalers.
This geographic diversification of AI infrastructure provides Nvidia stock with multiple growth engines, reducing its dependence on any single market or customer segment.
3. A Focus on a Full-Stack Platform Strategy
Nvidia’s competitive advantage extends far beyond individual chip performance to encompass an integrated platform spanning hardware, software, and networking infrastructure. This full-stack approach creates barriers to entry and drives higher customer attachment rates.
Nvidia’s networking revenue reached $5 billion in Q1, up 64% sequentially, as customers recognize the critical importance of efficiently connecting hundreds of thousands of GPUs.
“The data center is the unit of computing today” according to Gilad Shainer, NVIDIA’s Senior VP of Networking, highlighting how the entire infrastructure must work together seamlessly.
The platform strategy also extends to software, where Nvidia’s CUDA ecosystem has become the de facto standard for AI development.
The company continues to expand its software offerings through inference microservices, development tools, and industry-specific solutions, which increase customer stickiness and create recurring revenue opportunities.
By controlling the entire AI infrastructure stack, Nvidia can optimize performance across components and capture more value from each customer deployment than competitors offering point solutions.
Valuation Setup for NVDA Stock
Despite the massive run-up in NVDA stock, its valuation remains compelling relative to its growth trajectory. Nvidia is guiding for continued revenue growth, with Q2 sales expected to reach $45 billion, representing sustained momentum in AI infrastructure deployments.
Gross margins are expected to improve to 72% in Q2 and reach the mid-70s range by year-end as Blackwell production scales and yields improve. This margin expansion, combined with revenue growth, is expected to drive significant earnings per share growth over the coming quarters.
Nvidia’s strong balance sheet, with $1.3 billion in cash and no debt, provides financial flexibility to invest in growth opportunities and return capital to shareholders through its ongoing $14.3 billion share repurchase program.
Analysts tracking Nvidia stock expect its sales to rise from $130.5 billion in fiscal 2025 to $287 billion in fiscal 2028, an annual increase of 30%. Comparatively, adjusted earnings are forecast to expand from $2.99 per share to $6.57 per share in this period.
NVDA stock currently trades at a forward price-to-earnings multiple of 30x, which is below its 10-year average multiple of 36x.
If Nvidia stock is priced at a multiple of 30x and reaches its projected $6.57 in normalized EPS, it will trade around $197/share in June 2027, indicating an upside potential of almost 36% from current levels.
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Average Analyst Price Target for NVDA Stock
Wall Street remains bullish on NVDA stock, with a consensus price target of $173/share. Analysts expect the stock to rise around 19% from current levels over the next 18 months.
Notably, NVDA stock currently has a high target price of $220 and a low target price of $100.
Of the 66 analysts tracking Nvidia stock, 58 recommend “Buys”, six recommend “Hold”, and two recommend “Sell.”
TIKR Takeaway for NVDA Stock
Nvidia’s 28,650% decade-long run reflects the company’s successful transformation from a gaming-focused graphics company to the foundational infrastructure provider for the AI revolution.
The emergence of inference-heavy reasoning AI models, sovereign AI investments, and enterprise adoption creates multiple growth vectors that could drive the next phase of expansion.
While the stock’s valuation reflects much of this optimism, Nvidia’s full-stack platform advantage and expanding total addressable market suggest the company is well-positioned to continue delivering above-market returns for long-term investors.
The key question isn’t whether AI will continue growing; it’s whether Nvidia can maintain its technological leadership and platform dominance as the market evolves and competition intensifies.
FAQs
1. What is the market cap of NVDA stock?
The market cap of NVDA stock is $3.50 trillion, as of June 20, 2025.
2. How much has Nvidia stock returned in the last 10 years?
In the last 10 years, Nvidia stock has returned 28,647%.
3. What is the NVDA stock price target?
The average NVDA stock price target is $172.60.
4. Could Nvidia reach $1,000 per share in 2026?
It’s extremely unlikely for NVDA stock to top $1,000 per share in 2026.
5. Does Nvidia pay shareholders a dividend?
Yes, Nvidia pays shareholders an annual dividend of $0.04 per share.
6. Is Nvidia stock a buy, sell, or hold?
Out of the 66 analysts covering NVDA stock, 58 recommend a “Buy”.
7. Is NVDA stock undervalued or overvalued?
As of June 2025, Nvidia stock trades at an 18.60% discount to consensus price targets.
8. What is the P/E ratio for NVDA stock?
The P/E ratio for NVDA stock is around 30x.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
