Adria Cimino, The Motley Fool
5 min read
In This Article:
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Nvidia stock has surged in recent years as the company led the artificial intelligence boom.
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Moving forward, one particular element in Nvidia's earnings reports should impress long-term investors.
Nvidia (NASDAQ: NVDA) has already delivered spectacular gains for investors, advancing more than 1,400% over the past five years. This is thanks to the company's dominant position in the artificial intelligence (AI) revolution and the resulting explosion in earnings growth. Quarter after quarter, Nvidia's revenue has advanced in the double or triple digits and reached record levels.
In recent times, though, against a backdrop of import tariff uncertainties and restrictions on AI chip exports to China, investors have worried about growth ahead, which has weighed on Nvidia's stock, bringing it down 29% from the start of the year to its lowest point in April.
Today, along with the rest of the market, Nvidia has rebounded from those lows. This comes amid optimism that the tariff picture won't be as dark as originally expected and as tech customers continue to spend big on Nvidia's products and services. Now, my prediction is that Nvidia's positive momentum may not be over, and the stock will soar in 2025 thanks to one particular number. Let's explore this further.
So, first, a quick look at why Nvidia shares have skyrocketed over the past several years. The company is known for its graphics processing units (GPUs), high-powered chips with the ability to handle many tasks simultaneously. They primarily served the gaming market many years ago, but then Nvidia recognized their broad potential and expanded their use into other areas -- and AI stood out as a market where GPUs could shine.
In fact, GPUs are central to the most important AI tasks, such as the training and inference of large language models (LLMs), so these models can then go on to do their job of solving complex problems. Nvidia also built out an entire ecosystem of supporting products and services, and all of this has resulted in mind-boggling growth. In the recent fiscal year, revenue soared 114% to $130 billion.
This continued into the recent quarter, and the earnings numbers have proven that Nvidia's customers continue to pour investments into the company's products. Revenue advanced 69% to $44 billion during the period, and Nvidia noted a significant increase in demand for inference -- the "thinking" process LLMs go through to tackle questions and problems.
