When the generative AI revolution first took shape in 2023, Nvidia (NASDAQ:NVDA) emerged as “the” name among semiconductor stocks. Since then, of course, other names have joined NVDA stock in being crowned “AI winners” by the market. We’re not talking just about Advanced Micro Devices (NASDAQ:AMD).
Five other semiconductor stocks have arguably become AI superstars as well. So have some other names in areas of the semiconductor sector like memory chips. Yet while the list of AI winners keeps on growing, make no mistake. There’s still much merit in maintaining a position in this first big winner in the space.
Why NVDA Stock is Staying at the Top
Getting to the top is one thing. Staying there is another. With so many other semiconductor companies charging ahead with their respective endeavors to capitalize on the AI trend, I can understand why you may be concerned with what this means for Nvidia going forward.
After all, increased competition, if coupled with slowing growth, can mean bad news for a first-mover. What’s been playing out lately in the EV sector is a prime example of this. That said, what’s been playing out lately in the AI semiconductors differs greatly. This in turn is good news for Nvidia, and for NVDA stock.
According to Statista, AI chip sector growth will accelerate this year. By 2027, total annual revenue for the AI chip industry is projected to come in at $119.4 billion. That’s 123.4% above the reported size of this market in 2023. Not only does continued industry growth suggest minimal impact to Nvidia’s growth from competition.
The above-mentioned rising stars are largely focusing on nascent opportunities stemming from the generative AI growth trend. This leaves Nvidia well-positioned to stay dominant in the large language model training and data center ends of the AI chip market.
Another Banner Year in the Making
It’s safe to say the preceding fiscal year (ending January 2024) was a banner one for Nvidia. Thanks to skyrocketing generative AI-related demand for its chips, revenue skyrocketed as well, from $26.9 billion to $60.9 billion.
During this time frame, Nvidia’s earnings per share increased by nearly sevenfold. Yet while another sevenfold leap for earnings may not be in the cards, consider FY 2025 to be another banner year in the making. Demand trends remain very favorable. Nvidia not only continues to dominate its area of the AI chip market.
With the recent unveiling of its Blackwell GPU platform, Nvidia is poised to cement its lead in the provision of chips for training and running large-language AI models. This suggests Nvidia will meet, or perhaps even beat, growth forecasts for this year.
Sell-side consensus currently calls for the company to report 83% sales growth this fiscal year.
Consensus also calls for earnings to hit $24.83 per share, a more-than 100% move higher compared to FY 2024 earnings. If that’s not promising enough, remember that elevated growth stands to carry on into FY 2026 and beyond.
The Verdict: Hang on Tight
As we’ve pointed out before, Nvidia’s growth prospects, plus increasingly-favorable conditions for growth stocks, point to shares hitting prices north of $1000 sooner rather than later.
When we say “north of $1000,” we’re not talking about NVDA merely hitting this four-figure share price milestone and retreating.
If the stock maintains its current forward price-to-earnings ratio in the high-30s, hitting $1,250, $1500, or even more per share is well within reach over the next year.
With this, free to take a closer look at other top AI chip contenders, but keep one thing in mind. Given the prospect of this “once and future AI chip king” continuing to experience tremendous leaps higher, enter/maintain a NVDA stock position, and hang on tight.
NVDA stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
