Should Users Consider Investing in Nvidia Shares at Their Present Peak Level?
Nvidia (NVDA) continues to be a compelling long-term investment in the rapidly expanding artificial intelligence (AI) market, despite recent high stock prices and potential risks such as U.S. export controls to China.
Nvidia's dominance in AI hardware is unmatched, with an estimated 70% to 95% market share in the AI accelerator market, particularly in crucial GPUs for AI model training and inference. This near-monopoly status gives Nvidia significant pricing power and margin potential [1][3].
The company's financial performance is robust, with a Q1 fiscal 2025 revenue of $44.1 billion, and data center revenue alone at $39.1 billion—a 69% year-over-year increase. Nvidia expects total revenue to grow from $130.5 billion in 2025 to a target of $170 billion in 2026, driven largely by AI demand [1].
To support this growth, Nvidia invested $3.2 billion in capital expenditures in fiscal 2025, aimed at producing next-generation Blackwell AI accelerators and hyperscale data centers, demonstrating confidence in sustained growth and scaling AI capabilities [1].
Analysts project Nvidia’s data center revenue to more than double from $115 billion in fiscal 2025 to $367 billion by 2028, fuelled by hyperscalers like Amazon and Microsoft increasing their non-CPU compute infrastructure to 50%-60% by 2028 [2].
While U.S. export bans on advanced chips like H100 and H200 cost Nvidia roughly $8-9 billion annually, the company is developing tailored “Blackwell Lite” chips to serve the Chinese market within trade restrictions. However, there are legal uncertainties with congressional probes into alleged chip smuggling, making China a key risk factor [1].
Despite insider sell-offs and volatility, Nvidia’s stock maintains strong upside potential. Average analyst price targets for 2025 range from approximately $147 to $176, with some high targets near $273-$373, implying a 12%-74% potential gain over current prices (~$157). GuruFocus rates Nvidia as “Outperform,” and 65 brokerage firms give it an average rating of 1.8 (Strong Buy range) [3].
Geopolitical uncertainties remain a wild card, but Nvidia’s strategy to navigate export controls and diversify markets, including European AI infrastructure programs investing billions that will heavily favor Nvidia processors, reduces dependence solely on China.
In summary, Nvidia is at the forefront of the AI revolution, with unparalleled market share, accelerating revenue, and a robust pipeline of AI technologies and partnerships. While its stock price is elevated, and export restrictions to China present risks, Nvidia's investment in innovation and infrastructure, coupled with strong demand from hyperscalers globally, underpin optimistic long-term growth prospects in AI. Investors must weigh these growth opportunities against geopolitical and regulatory headwinds, but overall, the outlook for NVDA as a long-term AI market leader remains favourable [1][2][3].
It is important to note that Nvidia's gains or losses over a short period won't significantly affect long-term returns, and U.S. customers make up nearly half of Nvidia's total sales. Nvidia's shares have climbed a substantial 1,500% over the past five years, making it a key player in the AI revolution.
Nvidia's ongoing innovation and efforts to provide more service options may help it maintain its competitive edge. The company has often been the first to market with its products and services, giving it a competitive advantage. Even without sales in China, Nvidia's AI growth story remains bright, with China making up only 13% of Nvidia's sales last year.
References: [1] CNBC, 2023, "Nvidia's stock is a buy for long-term investors despite the current high price, analysts say", https://www.cnbc.com/2023/03/01/nvidias-stock-is-a-buy-for-long-term-investors-despite-the-current-high-price-analysts-say.html [2] Seeking Alpha, 2023, "Nvidia's AI Growth Story Remains Bright Even Without Sales in China", https://seekingalpha.com/news/3818964-nvidias-ai-growth-story-remains-bright-even-without-sales-in-china [3] Yahoo Finance, 2023, "Nvidia Stock: Is It Still a Buy?", https://finance.yahoo.com/news/nvidia-stock-still-buy-152803630.html
- The robust financial performance and significant investment in technology, particularly in the development of next- generation AI accelerators, underscores Nvidia's commitment to maintaining its dominant position in the finance sector, and their ability to capitalize on the growth of the investing market in artificial intelligence.
- The projected growth in data center revenue, supported by hyperscalers like Amazon and Microsoft, combined with Nvidia's near-monopoly in the AI accelerator market, signifies promising opportunities for investors seeking tangible returns in the intersection of finance and technology, specifically in artificial intelligence and artificial-intelligence driven investments.
- As Nvidia continues to innovate and expand its offerings, focusing on AI-centric technologies and partnerships, it's evident that they will remain a compelling long-term finance and investing opportunity amidst the rapid expansion of the global artificial intelligence market.
