Nvidia's Artificial Intelligence (AI) Shares May Propel to Staggering Heights of $180 Billion by 2025

Nvidia's Artificial Intelligence (AI) Shares May Propel to Staggering Heights of $180 Billion by 2025

Tech giant Nvidia (NVDA 0.35%) had an incredible 2024, but a closer examination of its latest stock chart reveals that it's beginning the new year on shaky ground. This instability is due to doubts surrounding Nvidia's ability to sustain its remarkable growth rate. Specifically, Nvidia's share price has decreased by more than 6% since it released its fiscal 2025 third-quarter results on November 20, 2024.

Despite surpassing revenue and earnings estimates during the previous quarter and offering guidance that surpassed expectations, investors have shown growing concerns. These concerns stem from the potential strain on Nvidia's profit margins, brought about by the escalation of its Blackwell artificial intelligence (AI) processors, along with a slowdown in its top-line growth.

However, perceptive investors should not let these concerns deter them, as there's a powerful factor that could help Nvidia regain its momentum in 2025.

Nvidia could generate at least $180 billion in revenue from AI processors in 2025

According to different reports, investment banking and financial services provider Jefferies predicts that Nvidia may ship around 6 million data center graphics processing units (GPUs) in 2025, thereby generating revenue between $180 billion and $200 billion. Jefferies' forecast appears conservative in comparison to the buy-side estimate of $205 billion to $215 billion.

For example, Morgan Stanley anticipates Nvidia will earn $210 billion from sales of its Blackwell systems alone in 2025, suggesting that overall data center revenue could be significantly higher, considering that Nvidia will continue selling its earlier generation Hopper processors in 2025. However, even if Nvidia manages to secure at least $180 billion in revenue from data center GPU sales in 2025, it would represent a substantial improvement over its potential revenue from data center GPUs in 2024.

In the first nine months of fiscal 2025 (ending on October 27, 2024), Nvidia's data center revenue was reportedly $79.6 billion. But this figure incorporates sales of Nvidia's data center networking chips. In the first three quarters of fiscal 2025, Nvidia generated $69.6 billion from data center GPU sales, with the remaining $10 billion stemming from sales of its networking products.

Data center GPUs accounted for 76% of Nvidia's $91 billion revenue in the first nine months of the fiscal year. The company expects to generate $37.5 billion in revenue during the fourth quarter of fiscal 2025 (ending in January 2025). Assuming that data center GPUs contribute 75% to fiscal Q4 revenue, as well, Nvidia's revenue from data center GPU sales could reach $28 billion.

By adding this fourth-quarter revenue to the data center revenue Nvidia has already generated, the company is likely to end fiscal 2025 -- which covers 11 months of 2024 -- with approximately $97.6 billion in data center GPU revenue for the year. Jefferies' estimate suggests that Nvidia's data center GPU sales could increase by at least 84% in fiscal 2026, which corresponds to the majority of 2025.

Jefferies' $180 billion estimate is based on an average selling price of $30,000 per data center GPU sold by Nvidia. This is not surprising, as the company is expected to price its Blackwell processors between $30,000 and $40,000.

However, this price range also implies a potential market for a higher average selling price, which could enable Nvidia to generate even stronger data center GPU revenue in 2025. Moreover, other estimates anticipate higher shipments of Nvidia's data center GPUs in the upcoming year, potentially leading to stronger-than-expected data center GPU revenue in 2026.

Furthermore, Jefferies' forecast suggests that Nvidia could generate an additional $82.4 billion in data center GPU revenue in 2026 (calculated by subtracting Nvidia's estimated fiscal 2025 revenue of $97.6 billion from $180 billion). Assuming Nvidia's other businesses remain unchanged, its top line could reach $211 billion in fiscal 2026 (calculated by adding $82.4 billion to Nvidia's estimated fiscal 2025 revenue of $128.5 billion).

However, the company has been demonstrating growth across all of its other markets, as well, indicating that it may surpass the average revenue estimate of $195 billion for fiscal 2026.

Buying the stock is a smart move presently

The information discussed above indicates that Nvidia seems poised to deliver another year of impressive growth in 2025 that could exceed analyst expectations. Consequently, savvy investors will benefit from purchasing this AI stock while it's still trading at an attractive 32 times forward earnings, which is less than the Nasdaq-100 index's earnings multiple of 33 (using the index as a proxy for tech stocks).

Additionally, Nvidia's price/earnings-to-growth ratio (PEG ratio) stands at 0.98, according to Yahoo! Finance. This is another indication that Nvidia is worth buying right now, as a PEG ratio of less than 1 implies that a stock is undervalued in light of its earnings growth potential -- which could be stronger than expected in 2025 and contribute to another significant price increase, following the recent slump.

1. Given Nvidia's estimated potential revenue of at least $180 billion from AI processors in 2025, smart investors might consider this as an opportunity for profitable investing in the finance sector.
2. Despite Nvidia's current stock instability, its forecasted strong performance in the AI market and the attractive price-to-earnings ratio of 32 times forward earnings make it an attractive option for those looking to invest in finance and technology, such as the Nasdaq-100 index.

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