The meta platforms just hinted that Nvidia will have a monster 2025

As we enter the final quarter of 2024, some investors may be thinking about how they want to position their portfolio for 2025. This includes evaluating the winners and losers and whether you bought Nvidia (NVDA 2.24%) stock at the beginning of the year, you have nice earnings.

With the stock up roughly 150% so far in 2024, investors would be forgiven for thinking it couldn’t go any higher. However, some indications on other companies’ conference calls indicate that 2025 will be as good a year for the company as 2024. The question is, will the stock see the same benefit?

Meta will buy more GPUs in 2025

Nvidia’s incredible growth has been tied to the artificial intelligence (AI) arms race. Its main product is the graphics processing unit (GPU), which can be used to perform multiple calculations in parallel. Furthermore, companies don’t just buy one or two of these units. Instead, they buy them by the thousands. This gives AI researchers ridiculous computing power and allows them to quickly train AI models.

As these models become more complex, the time required to train them increases exponentially. Take Meta platforms‘ (META -1.87%) The generative llama AI model, for example. The current iteration is Llama 3.1, but Meta has already started training Llama 4. However, CEO Mark Zuckerberg noted that the training time for Llama 4 will likely be 10 times longer than it took to train Llama 3. Beyond Llama 4, training time will likely increase again.

This is not just a Meta problem. ChatGPT from OpenAI, AlphabetHis twins and other generative AI models will experience the same phenomenon as these models improve and become more complex.

Do you think these AI innovators will wait 10x longer for their next AI model to train? Probably not. Instead, they will increase their computing power to speed up the process, significantly benefiting Nvidia.

In its Q2 earnings release, Meta also commented that its infrastructure costs will increase significantly in 2025. This is clearly related to its computing power to create the best AI model it maybe. Nvidia will be the main beneficiary of this, making it an intriguing stock for 2025.

Nvidia should have strong growth in 2025

Nvidia also has a few tricks up its sleeve for 2025. Its Blackwell technology is expected to launch and, according to CEO Jensen Huang, offers 3 to 5 times more AI throughput in a powerhouse data center limited than Hopper, Nvidia’s current architecture. That’s a big deal, and Blackwell could become a new source of revenue growth for Nvidia. Currently, demand for Blackwell “far exceeds supply,” according to management.

That’s just part of the reason Wall Street analysts believe Nvidia can grow fiscal 2026 (ending January 2026) revenue by 42%. Strong earnings growth is also expected, with earnings per share (EPS) expected to rise from $2.84 in fiscal 2025 to $4.02 in fiscal 2026. At current prices, this would value the stock at around 30 times fiscal 2026 earnings.

Given Nvidia’s growth, that’s not a terrible price to pay for the stock if it can maintain its business beyond fiscal 2026.

Looking one year out is hard enough, but looking two years out is considerably harder. The big question is whether the demand for Nvidia GPUs will last beyond fiscal 2026. If not, then Nvidia is not worth buying here. But if it does, Nvidia stock could be a great buy right now.