This Artificial Intelligence (AI) Stock Could Soar by 67% in 2025. Here's Why.

Artificial intelligence (AI) is not a fleeting trend; it continues to present significant opportunities for investors. With the rapid advancements and investments in AI technology, there is still potential for considerable growth in this sector. One standout stock for AI investing remains Nvidia (NASDAQ: NVDA), which has effectively capitalized on the growing demand for AI solutions.

Nvidia distinguishes itself from other AI-centric investments by being notably profitable from the substantial AI investments made by major tech companies. According to analyst Hans Mosesmann from Rosenblatt Securities, the price target for Nvidia is set at $220 per share, suggesting a remarkable 67% upside within the next year. While this may seem ambitious, it is achievable under certain market conditions.

Nvidia’s GPUs Lead the Industry

A key factor contributing to Nvidia's success in the AI market is its ability to generate significant revenue from AI-related solutions. While many tech firms invest heavily in enhancing their computing capabilities for AI training, Nvidia benefits financially from these investments.

The company's graphics processing units (GPUs) are considered top-of-the-line, making Nvidia the preferred choice for businesses aiming to train AI models. GPUs excel at parallel processing, allowing them to perform many calculations at once, which significantly speeds up AI training. Moreover, these GPUs can be grouped together in clusters, amplifying their computational power. This capability is crucial as leading AI companies deploy servers powered by thousands of Nvidia GPUs to expedite their AI model training.

Nvidia's current success is built on the foundation of its previous-generation GPUs, but the introduction of its next-generation Blackwell GPU architecture promises unprecedented performance enhancements. Blackwell can train AI models four times faster than its predecessor, positioning it as a valuable upgrade for companies prioritizing computational efficiency.

However, GPUs have finite lifespans in data centers due to their intensive use, often lasting between one to three years. Many GPUs acquired in recent years may soon need to be replaced. Given the persistent demand for AI and ongoing efforts to expand computing capacity, Nvidia is poised for continued growth in the future.

Increasing Competition in AI

Even with its strong market position, Nvidia faces challenges as competition intensifies. One emerging trend is the push for using central processing units (CPUs) for AI inference tasks. While Nvidia's GPUs are highly regarded for training models, CPUs may be more suitable for simpler AI inference tasks, making them more resource-efficient in specific scenarios.

Furthermore, many of Nvidia's large clients are pursuing the development of custom AI training accelerators. These specialized chips could allow technology companies to bypass Nvidia by eliminating the need for costly GPUs. Still, custom AI accelerators require specific workload configurations to maximize their performance. In cases where businesses are testing new AI models or developing generalized AI applications, these accelerators may not be the most efficient choice.

Despite these competitive headwinds, Nvidia's challenges appear manageable and are likely to impact only a segment of its overall business.

Nvidia’s Stock Valuation Reflects Growth Potential

So, what could drive Nvidia’s stock to soar by 67% in 2025? The answer lies in maintaining its growth trajectory and providing a positive outlook for the upcoming year.

Currently, Nvidia sells at a price-to-earnings ratio of 52, which is near its lowest point over the past two years. This valuation contrasts with other tech giants, such as Apple and Amazon, trading at price-to-earnings ratios of 38 and 47, respectively, despite slower growth rates.

Projected revenue growth for Nvidia stands at 52% for fiscal year (FY) 2026 (ending January 2026). If Nvidia can maintain its profit margins while experiencing modest valuation increases, its stock could realistically achieve the projected 67% growth. Additionally, investors are looking for signals that FY 2027 will also show strong performance; otherwise, the stock may decline in anticipation of weaker results.

At this junction, Nvidia's expectations align well with its actual business performance. Though some investors may take profits by selling shares, a significant upside remains. Given the recent pullback in its stock price, Nvidia presents a compelling investment opportunity.

AI, Nvidia, Growth