Nvidia: Growth through advances in artificial intelligence?

The Nvidia stock has impressed in the past with exceptional returns, but in the last three months, it has shown signs of diminishing momentum. Doubts about the company's AI-related future prospects and its ability to continue achieving impressive growth have led to the stock price stagnating during this period. However, analysts are projecting a significant increase in deliveries of Nvidia's AI graphics processors (GPUs) by 2025. According to the market research company TrendForce, deliveries could rise by 55% next year, driven by the introduction of the new Blackwell processors. It is anticipated that Blackwell processors will account for 80% of AI GPU deliveries next year, while older Hopper chips remain in high demand. Another positive impetus for Nvidia comes from the Japanese investment bank Mizuho. They have raised their estimate for Nvidia's AI GPU deliveries in 2025 by 8% to 10%, attributed to improvements in the company's supply chain. The foundry partner Taiwan Semiconductor Manufacturing (TSMC) plans to double its capacity for advanced packaging, which will enable Nvidia to produce more AI GPUs. The positive outlook is also reflected in optimistic market assessments: Allied Market Research anticipates that the AI chips market will grow by 38% annually, generating revenues of 384 billion US dollars by 2032. Nvidia is a dominant player in this market, and TSMC's improved production profile is expected to secure the company's leading position. Despite a high valuation with a price-to-earnings ratio (P/E) of 58 compared to the Nasdaq-100 average, Nvidia's growth provides a justification for this valuation. An under-average price-to-earnings-to-growth ratio (PEG) of 0.14 suggests that the stock might be undervalued in regard to the projected growth. This could offer a buying opportunity before the forecasted increase in AI chip sales in 2025 further drives the stock.