Nvidia (NASDAQ: NVDA) has been one of the best stocks to own over the past two years, returning 239% in 2023, 169% so far in 2024, and over 800% since the start of 2023. That’s quite the run, and many investors might wonder if year three of its run will also be profitable.
While the stock doubling or tripling isn’t likely to occur, a modest gain, like crossing the $200 price per share mark, may be in the cards. So, could Nvidia do this? After all, a $200 stock price at the end of 2025 would represent a 50% rise from today’s price.
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Understanding why Nvidia has been a successful stock is critical, as it will clue investors in on whether these trends are sustainable. Artificial intelligence (AI) has been a huge driver across the entire stock market, and few companies (if any) have benefited as much as Nvidia.
Nvidia makes graphics processing units (GPUs), which are used to train and run AI models. Because they can process calculations in parallel, they can process information much faster than a standard CPU on a laptop or phone can. Furthermore, multiple GPUs can be connected in clusters to create unreal processing speeds.
Over the past two years, nearly all of the big tech players have purchased thousands (if not hundreds of thousands) of GPUs from Nvidia, which is why its revenue has skyrocketed.
Nvidia’s margins also expanded during this run, as its profit margin rose from about 30% to more than 55%. These two factors caused Nvidia’s profits to soar, which increased the stock price.
The question is, how long will those catalysts last? After all, no company can sustain its revenue doubling year over year forever.
As Nvidia’s results reach tough year-over-year comparisons, its growth rate will naturally slow down, which is what we’re seeing now. In Q2 FY 2025 (ending July 28), Nvidia’s revenue rose 122% year over year. That’s down from the 262% growth it achieved in Q1. Q3 looks to bring about more of the same, as management expects $32.5 billion in revenue, up 80% from last year.
Make no mistake; these are incredible growth figures, but they are slowing down from the rapid growth investors became accustomed to in 2023 and 2024.
According to Wall Street analysts, 2025 will continue the growth moderation trend. For FY 2026 (ending January 2026), Wall Street analysts expect about 43% growth, which is still quite impressive for Nvidia’s size. They also expect earnings per share growth to match revenue growth, rising 43% next year.
