NVIDIA Corporation (NASDAQ: NVDA) may grow to twice Apple’s size in 2025 and become the most profitable company of all time. That’s according to Saxo’s outrageous predictions for the company. Here is what it says:
“In 2025, Nvidia’s success is supercharged further with the availability in volume of its revolutionary 208-billion transistor Blackwell chip, a chip that drives up to a 25-fold increase in performance of AI calculations per unit of energy consumed relative to the prior H100 generation. With the intensifying AI arms race as no giant or even government wants to be left behind, and as AI data centre electricity costs have soared, the insatiable demand for the more powerful and yet less power-hungry Blackwell chips sees Nvidia taking the crown as the most profitable company of all time. It handily surpasses Apple’s record USD 105 billion of profits next year, and with far faster growth baked into expectations, its market cap nearly doubles again, making it twice the size of Apple. This sees it tower above all other companies in the world at a value of USD 7 trillion, or 10% of the global equity market. Apple and other tech giants’ valuations suffer in relative terms, as their profitability is weighed down by the need to build titanic data centres to keep up in the AI gold rush.
Potential market impact: Nvidia shares trade well north of USD 250, before the market begins to question its potential to grab an ever-greater share of corporate profits, and as unwelcome regulatory scrutiny on its monopoly status tempers the outlook”.
Nvidia stock (NVDA) has gained traction ever since the launch of ChatGPT, driving generative AI into the limelight and fueling the unprecedented demand for AI hardware. The stock has surged a remarkable 189% year-to-date, reflecting the company’s significant role in the AI industry and strong financial performance throughout the year.
Its Graphics Processing Units (GPUs), initially used for the video games market, now rake in significant revenue from AI customers. Despite some regulatory challenges, the company has been maintaining its trajectory of growth. Most analysts maintain a bullish outlook on Nvidia’s prospects. For instance, Melius Research analyst Ben Reitzes likens the company’s positioning to that of Apple Inc, highlighting enthusiasm for the Blackwell chips. Similarly, Harsh Kumar from Piper Sandler identifies Nvidia as their top large-cap choice in the artificial intelligence accelerator market.
However, history has shown that analysts are not always right. According to TipRanks data, at the end of 2023 34 different analysts have published 12-month projections for Nvidia stock, with the average price target of just over $661 per share implying a 33% upside over the next 12 months. At the time NVDA achieved record-breaking revenue of over $18 billion, a 206% year-over-year increase and 34% growth from the previous quarter. However, its valuation metrics presented mixed signals: its P/E ratio of 65 was relatively modest given its growth trajectory. However, its P/S ratio of 28 far exceeded competitors like AMD and Intel, suggesting the stock “was priced for perfection”. We now know that those predictions were extremely pessimistic as NVDA’s stock price nearly tripled in 2024.
Our research director shared his views on NVDA’s earnings results here. He thinks NVDA stock can reach $170 within 3 months. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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