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NVDA 2025 Forecast: How Long Can Nvidia Stock Stay on Top of the S&P 500?

August 31, 2024 — 08:51 am EDT

Written by Mohit Oberoi for Barchart ->

While Nvidia ($NVIDIA Corp(NVDA)$  ) stock has come off its all-time highs, and fell over 6% on Thursday despite reporting better-than-expected fiscal Q2 2025 earnings, it is still the best-performing S&P 500 Index ($SPX) stock year-to-date, with a 2024 gain of more than 141%.

The chip designing giant delivered gravity-defying returns in 2023, soaring 240% to deliver 10 times the returns of the S&P 500 on the year. In the process, NVDA became the first semiconductor company to join the ranks of trillion-dollar giants amid the artificial intelligence (AI) boom.

This year, it joined the $2 trillion market cap club, and has occasionally been a $3 trillion dollar enterprise. In fact, Nvidia briefly outflanked both Apple ($Apple(AAPL)$  ) and Microsoft ($Microsoft(MSFT)$  ) to become the largest company by market cap earlier this summer - which would have been unthinkable just a few quarters back.

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However, after a strong first half, NVDA shares have sagged, and mostly moved sideways. Is there still some steam left in Nvidia or has the stock already peaked? We’ll discuss in this article, beginning by analyzing its recent financial performance.

Why Nvidia Stock's Post-Earnings Drop Wasn’t Surprising

Nvidia posted a good set of numbers in the fiscal second quarter, with revenues rising 122% YoY and net income more than doubling to $16.6 billion. Management forecast 80% YoY topline growth for the current quarter - and while that might sound like a “slowdown,” as markets are so used to triple-digit revenue growth from Nvidia, the forecast was better than what analysts were modeling.

But then, markets don’t simply expect “good” but “great” numbers from Nvidia, especially after the stock was entering the confessional on the heels of a stellar rally in the previous couple of weeks. While NVDA missing the consensus analyst estimates would have been catastrophic for its stock price, markets at the very least expected much more than the usual beat from the stock, which was up around 150% YTD ahead of the report.

As I had noted in Nvidia’s pre-earnings analysis, the stock's rally from the August lows had priced in an earnings beat. With the post-earnings price action now in the rearview, let’s look at how analysts reacted to NVDA’s fiscal Q2 earnings.

NVDA Stock Forecast

Generally, analysts advised buying the dip in Nvidia stock, and brokerages including Bernstein, Morgan Stanley, Bank of America, and JPMorgan Chase all raised their target prices. 

However, the extent of these target price hikes was not to the scale that we saw after the previous few earnings calls - and not without reason. First, the earnings and guidance beats were not to the same degree that Nvidia delivered in the previous few quarters, and second, many brokerages had already raised NVDA’s target price in the days ahead of the report.

Meanwhile, Citi has now named Apple ahead of Nvidia as its 2025 top pick. Previously, in June, Deepwater Asset Management managing partner and noted tech analyst Gene Munster said that Apple will outperform Nvidia over the next year. 

Can Nvidia Stock Continue to Rise in 2025?

There is still some heat left in Nvidia, especially for someone looking to buy the stock for the long haul. The company expects to start shipping its Blackwell chips in the final quarter of this fiscal year, with production continuing to ramp up in the next fiscal year. The importance of these next-generation AI chips cannot be understated, and the word “Blackwell” popped up 58 times during the fiscal Q2 earnings call for a reason.

Notably, CEO Jensen Huang is quite optimistic about the data center opportunity, and stressed that graphics processing units (GPUs) will replace central processing units (CPUs) across data centers.

For now, there looks to be no sign that tech majors are turning their backs on AI investments - and if anything, they have increased their capex, a large part of which is going towards buying Nvidia’s chips. The risk here is that these so-called hyperscalers are also working on their own custom chips. Also, if they are forced to cut back on their capex due to a macro slowdown or impatience from investors who might want to see quick returns on investments in the mega AI push, demand for Nvidia’s chips could be negatively impacted.

That said, Nvidia still has several untapped market opportunities, and the valuations now look a lot more grounded, with a next 12-month (NTM) price-to-earnings (PE) multiple of around 35x.

While Nvidia may or may not hold onto its status as the best-performing S&P 500 index constituent into 2025, as the law of averages will someday catch up with the stock, I believe the shares should be higher than current levels by the end of 2025.

How High Can NVDA Stock Go?

Nvidia’s current mean target price – which typically analysts expect any stock to hit within 1 year – is $142.60, and implies an upside of roughly 19.5% over Friday’s closing prices. The stock’s Street-high target price is $200, which is over 67% higher. Looking at the current scenario, I believe Nvidia could still deliver strong double-digit returns by the end of 2025, as the AI investment spree is showing no signs of tapering off.

On the date of publication, Mohit Oberoi had a position in: NVDA , AAPL , MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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