Nvidia Stock Is Up Over 900% Since 2023. Here's Why It's Still a Screaming Buy.

Since the beginning of 2023, Nvidia (NVDA) has seen its stock rise by an incredible 906%. Currently, it is trading close to its all-time high. This remarkable increase can intimidate some investors who might think, "Nvidia has surged tremendously; how can it continue to grow?"

This phenomenon is often referred to as "price anchoring," where investors fixate on past prices and perceive stocks as overvalued when they increase significantly. Although this mindset is common, it has led many, including myself, to miss out on a substantial portion of Nvidia's growth. However, when compared to its competitors, Nvidia still appears to be a reasonably valued stock.

Even if you missed the initial rise, there is still considerable potential ahead for Nvidia.

Nvidia's Growth Potential in 2025

Nvidia's remarkable success can be directly linked to the boom in artificial intelligence (AI). The company has profited immensely as large enterprises investing in AI have embraced Nvidia's industry-leading GPUs for their computing needs. These GPUs excel at processing numerous calculations simultaneously, and they can be interconnected in large clusters. It's not uncommon for AI model training to involve servers powered by over 10,000 GPUs.

The early stages of AI infrastructure development were monumental, but companies are planning to invest even more in the coming year. Many cloud computing companies have announced an increase in capital expenditures (capex) for 2025, echoing a similar message from AI giant Meta Platforms during its latest earnings report. Additionally, Taiwan Semiconductor, which manufactures Nvidia's chips, has predicted that revenue from AI-related chips will double by 2025, signaling that Nvidia's growth trajectory is only starting.

Wall Street analysts are optimistic about Nvidia's future as well. For fiscal year 2026 (ending January 2026), approximately 60 analysts estimate that Nvidia will achieve revenue of $196 billion—representing a 52% increase from projected figures for fiscal year 2025. Such growth is unprecedented for a company of Nvidia's scale and reinforces the idea that its growth story is far from finished.

In summary, Nvidia appears set for a remarkable 2025, but the stock still maintains a reasonable valuation.

Understanding Nvidia's Valuation

Due to Nvidia's expected strong growth in the upcoming year, it is more useful to use forward-looking metrics for valuation rather than trailing earnings. At the current stock price, and if Nvidia meets analysts' targets, it is projected to trade at 33 times its earnings at the end of fiscal year 2026.

This valuation is not excessively high, especially when compared to notable companies like Apple and Microsoft, which trade for 27 and 30 times their projected earnings for fiscal year 2026, respectively.

Moreover, if Nvidia continues to maintain its impressive growth rates, it may not drop to lower valuation levels, suggesting that the stock could keep rising throughout the year, providing investors with substantial returns.

While Nvidia has enjoyed a tremendous run in the last two years, 2025 is poised to be another fruitful year for the company. Although growth may not match the incredible gains seen in 2023 or 2024, there remains abundant potential in the business, making it a compelling investment opportunity now.

Note: The author may have positions in Nvidia and its chip manufacturer, Taiwan Semiconductor. Additionally, the author has investments in various high-profile companies including Apple, Meta Platforms, and Microsoft, and may have recommendations regarding these stocks.

Nvidia, Stocks, AI