Nvidia Stock Will Soar in 2025. Here’s Why.

Nvidia has made no bones about the robust demand, with big tech companies jockeying to be among the first to receive these next-generation AI-centric chips. In an interview with CNBC, Huang said the demand for Blackwell was “insane.” He went on to say, “Everybody wants to have the most, and everybody wants to be first.”

With everyone wanting to get their hands on these chips, supply is currently outstripping demand, and that situation isn’t expected to be resolved for several quarters. During the earnings call, chief financial officer Colette Kress said, “Blackwell demand is staggering, and we are racing to scale supply to meet the incredible demand.” In her written commentary, she added (emphasis mine), “Both Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026.” For context, Nvidia’s fiscal 2026 kicks off in late January.

The resulting pent-up demand could act as a springboard for Nvidia sales heading into next year.

I’m not the only one who thinks so. Beth Kindig, CEO and lead tech analyst for the I/O Fund, believes that in 2025, sales of Blackwell processors will outpace sales of Nvidia’s GPUs for 2023 and 2024 — combined. Kindig says the company’s unbridled pricing power could power a minimum of 50% growth in its data center segment next year. That could lead to as much as 70% upside for the stock in 2025.

This race is on to increase the availability of its flagship processor, as Nvidia works with its suppliers to ramp up production. As the supply of these next-gen processors increases, so too will the company’s revenue, since greater production means more chips available to sell. This will, in turn, supercharge already robust profits, fueling a surge in its stock price.

To be clear, we don’t know exactly when the supply constraints will ease, but Nvidia has a vested interest in working through the bottleneck as quickly as possible. Management has historically been conservative with its estimates, so we can probably expect a gradual increase in the supply of these top-end chips, which will be the catalyst for ramping up Blackwell sales as the year progresses.

Some investors have resigned themselves to the fact that Nvidia’s growth has already peaked. I believe that view is premature and represents an opportunity for astute investors with a longer-term view. Its premium valuation has already begun to ease. Wall Street is predicting the company will generate EPS of $4.41 in fiscal 2026, which works out to just 31 times next year’s sales (as of this writing).

At some point in 2025, the evidence suggests, the supply of Nvidia’s best-of-breed Blackwell AI chips will accelerate, which will cause a corresponding increase in sales. I predict that this will be the catalyst that will ignite the stock price, causing it to soar in 2025.

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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Prediction: Nvidia Stock Will Soar in 2025. Here’s Why. was originally published by The Motley Fool