Prediction: Nvidia stock could hit $200 in 2025

Nvidia (NVDA -0.66%) The stunning rally in stocks that began towards the end of 2022 has taken a break of late. More specifically, Nvidia stock has seen some volatility since early July, and the company’s solid Q2 fiscal 2025 results weren’t enough to inject some life into its stock market fortunes.

The reasons behind Nvidia’s recent volatility can be attributed to concerns over its slowing growth as well as the viability of artificial intelligence (AI) technology following the massive investments made in this space by companies and governments across the globe. However, Nvidia’s quarterly results and upbeat guidance make it clear that the company’s impressive growth is here to stay.

Moreover, a closer look at the consensus stock price target indicates analysts expect Nvidia stock to regain its mojo. Nvidia has a 12-month median price target of $150 according to the 63 analysts covering the stock, which would be a 28% upside from current levels. However, the $200 price target suggests Nvidia stock could rise another 71% over the next year.

Here’s why the semiconductor company’s stock could hit that level in 2025.

Nvidia’s dominance in AI chips will be the driving force behind the stock

Strategy advisory firm Constellation Research gave Nvidia’s stock a $200 price target in June this year. The firm points out that the semiconductor enjoys several upsides that could send its stock to $200 next year and even help it sustain its rally for a longer period.

Constellation says Nvidia has been able to create high barriers to entry in the AI ​​chip market and has a solid product roadmap, while high switching costs mean customers locked into its ecosystem are unlikely to switch to a competing offer soon. For these reasons, the research firm estimates that Nvidia enjoys a 24-month technological lead over its rivals in the AI ​​graphics card market.

A closer look at Nvidia’s recent quarterly results will show that it is indeed the graphics card provider for companies and governments looking to train and deploy AI models. The company’s revenue in the second quarter of fiscal 2025 rose 122% year-over-year to $30 billion. The data center business generated $26.3 billion in revenue during the quarter, a 154% increase over the same period last year.

Nvidia CEO Jensen Huang stressed that demand for the company’s graphics cards based on the Hopper architecture remains solid, with shipments expected to increase in the second half of the fiscal year. This is a testament to Nvidia’s outstanding level in the AI ​​graphics processing unit (GPU) market, as the company’s next-generation Blackwell chips are already in customer trials and are set to enter full production from the fourth quarter of the fiscal year.

In other words, customers are still willing to buy Nvidia’s older AI chips even though new ones are on the way, suggesting that its products are indeed superior to rivals such as AMD and Intel. For example, the Nvidia Hopper H200 processor outperforms its AMD rival, the MI300X, by more than 40% in AI inference applications. Given that the H200 apparently costs less than the MI300X, it’s easy to see why Nvidia has seen demand for this chip improve, even though newer chips are on the way.

Not surprisingly, Nvidia is likely to maintain its dominant position in the AI ​​chip market. This also helps the company maintain healthy pricing power and enjoy high margins. For example, Nvidia’s non-GAAP gross margin rose 5 percentage points year over year last quarter to 75.1%.

As a result, the company’s adjusted earnings rose 152% year over year to $0.68 per share, prompting analysts to raise their earnings forecasts for the current fiscal year and next.

NVDA EPS estimates for current fiscal year data by YCharts

The stock could top $200 in 2025

The chart above indicates that Nvidia’s earnings could hit $4 per share in the next fiscal year (which will coincide with most of calendar 2025). However, there is a good chance that its earnings will exceed this level, as analysts may continue to raise their growth expectations due to a potentially large increase in its data center revenue next year.

Let’s say Nvidia’s earnings actually rise to $4 per share. That would be a 41% increase over projected earnings for fiscal 2025. If the stock maintains its price-to-earnings ratio of 55 at that time, the stock price could jump to $220. It’s worth noting that Nvidia is currently trading at a relative discount to its five-year average price-to-earnings ratio of 72.

More importantly, this company can justify its valuation with impressive growth due to its robust position in the AI ​​chip market. So there is a good chance that this AI stock will resume its way north and cross $200 next year.