This Artificial Intelligence (AI) Company Gained $2 Trillion in Value Last 12 months, and Wall Street Thinks It Could Be Headed Much Higher in 2025

This previous 12 months was one other terrific one for know-how shares in specific. Tailwinds pushed by synthetic intelligence (AI) helped push the S&P 500 increased by 23%, whereas the Nasdaq Composite gained a formidable 29%.

The “Magnificent Seven” shares have been among the many 12 months’s prime gainers in the market, and maybe no different garnered extra consideration than semiconductor chief Nvidia — which was the top-performing inventory in the Dow Jones Industrial Common in 2024.

Last 12 months, Nvidia gained roughly $2.1 trillion in market capitalization — the best of any firm. This propelled Nvidia to develop into one of many world’s most precious companies. Whereas Nvidia’s present run might recommend that the inventory is due for a pullback, Wedbush Securities know-how analyst Dan Ives is asking for considerably extra development forward for the AI darling — and I agree.

Let us take a look at Nvidia’s newest catalysts and make the case for why 2025 could possibly be one other one for the file books.

Over the past two years, Nvidia has emerged because the chief of the pack in the AI marathon, and all of it boils down to at least one factor: graphics processing models (GPUs). GPUs are superior chipsets obligatory for growing generative AI purposes.

Nvidia’s deep roster of GPUs has helped the corporate separate from opponents reminiscent of Superior Micro Units, and purchase an estimated 90% of the GPU market.

So as to add some context right here, Nvidia’s dominance has fueled constant income and revenue development for the corporate — permitting it to double down on analysis and growth (R&D) and pioneer even newer, revolutionary merchandise. Enter Blackwell, Nvidia’s next-generation GPU structure, which is reportedly already bought out for the subsequent 12 months.

Whereas that is extra of a company-specific tailwind, Ives believes that broader investments in AI infrastructure might eclipse $1 trillion in the approaching years. Nvidia is making the most of this windfall of rising capital expenditure (capex), underscored by investments in European GPU cluster specialist Nebius, and the acquisition of AI infrastructure enterprise Run:ai (which it acquired for a reported $700 million).

Given the large rise in Nvidia’s inventory worth, it is a prudent thought to have a look at among the firm’s valuation metrics and cross-reference them in opposition to the catalysts I’ve lined above.

Information supply: YCharts.

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