Nvidia: Giant on a Growth Journey in the AI Era

Nvidia continues to impress with remarkable performance in the stock market. In 2023 alone, the stock price soared by an astonishing 239%, with a previous increase of 170% this year. Investors are betting that Nvidia will also experience strong growth in 2025, as data center infrastructures worth a trillion US dollars transition to advanced hardware for artificial intelligence. In light of this impressive momentum, it may be tempting to acquire Nvidia shares with the prospect of further high returns. However, a look at the company's current position in the data center field suggests what investors can expect in the coming year. Wall Street analysts forecast a 51% increase in revenue in the next fiscal year, which ends in January 2026. Such growth is substantial for a company expecting revenue of $129 billion this year. A key factor could be the introduction of "Blackwell" in 2025. This completely new computer platform combines multiple chips to provide revolutionary performance for generative AI, quantum computing, and other compute-intensive tasks. "The demand for Blackwell is overwhelming, and we are working hard to ramp up supply to meet the enormous customer demand," said CFO Colette Kress. Although this enormous demand suggests potential for future growth, some challenges are already foreseeable. The past revenue increases were remarkable: 94% year-over-year growth in Q3, a decline from 122% in Q2 and 262% in Q1. Nvidia seems well-positioned to continue benefiting from the increasing complexity and size of AI models that require more powerful GPUs. Nevertheless, investors should be risk-aware and keep an eye on possible limitations of the price rally. In parallel, Advanced Micro Devices (AMD) is also experiencing notable growth with its Instinct GPUs for data centers. In the last quarter, AMD achieved a revenue growth of 122% compared to the previous year, but it could not significantly capture market share from Nvidia. Nvidia boasts the strongest supply chain to meet demand and posted revenue of $30.8 billion for its data center GPU business in the last quarter, while AMD reached $3.5 billion.