Nvidia: Can the AI Chip Giant Sustain Its Unstoppable Growth?

Nvidia (NVDA) has been on an unstoppable growth trajectory, driven by the increasing demand for advanced chips in the AI and data center markets. The company's latest earnings report, released on February 26, 2025, showcased another quarter of record-breaking sales and profits. However, the question remains: can Nvidia sustain this growth, and is the stock still a buy?

Unstoppable Growth

Nvidia's revenue for the fourth quarter of fiscal 2025 reached a record $39.33 billion, up 12% from the previous quarter and up 78% from a year ago. The company's gross margin fell slightly to 73.0% but remained strong. Nvidia's operating margin, however, increased to 62.42%, reflecting the company's efficient operations and effective cost management.



Nvidia's CEO, Jensen Huang, attributed the company's success to the growing demand for AI inference and the increasing compute power required for training and long-term thinking. The company's Blackwell AI supercomputers have been in high demand, with billions of dollars in sales in their first quarter.

Strategic Partnerships and Acquisitions

Nvidia's growth strategy has been bolstered by strategic partnerships and acquisitions. The company has partnered with AWS to bring Nvidia's AI services to the cloud, collaborated with Cisco to integrate Nvidia's Spectrum-X into its networking portfolio, and acquired Mellanox Technologies to expand its data center portfolio. Additionally, Nvidia is set to acquire Arm Holdings, which will enable the company to expand its reach into new markets.



Competitive Landscape

While Nvidia has been dominant in the AI chip market, competitors like AMD and Intel are not standing still. AMD has made significant strides in the HPC and data center markets, while Intel is set to launch its Arc GPUs, targeting the mid- to high-end GPU market. These competitors pose threats to Nvidia's market share but also present opportunities for the company to innovate and maintain its competitive edge.

Is the Stock Still a Buy?

Nvidia's stock has gained about two-thirds of its value over the past 12 months, and the company's latest earnings report has fueled optimism about its future prospects. However, the stock is not without risks. Nvidia's valuation is high, with a price-to-earnings ratio of 47.4 based on 12-month forward earnings. If demand for AI chips slows down, the stock could become even more expensive.



Analysts are widely bullish on Nvidia's stock, with all but one of the analysts tracked by Visible Alpha issuing a "buy" or equivalent rating. The consensus price target of about $175 would imply 32% upside from Monday's intraday price. However, investors should be cautious and consider the potential risks and uncertainties before making a decision.

In conclusion, Nvidia's unstoppable growth in the AI chip market has been driven by strong demand and strategic partnerships. While the company faces competition from AMD and Intel, it can maintain its competitive edge by innovating and leveraging its strong brand. However, the stock's high valuation and potential risks should be considered before making an investment decision.