Nvidia: Still a Millionaire-Maker Stock?

Nvidia (NVDA) has been a darling of the tech industry, delivering impressive growth and returns for investors. But with the stock up over 90% in the past year, is it still a millionaire-maker, or has the rally run its course? Let's dive into the fundamentals and expert opinions to find out.



Strong Fundamentals

Nvidia's first-quarter fiscal 2025 results were nothing short of remarkable. The company reported record revenue of $26.0 billion, up 18% from the previous quarter and up 262% from a year ago. Earnings per share (EPS) also soared, with GAAP EPS of $5.98, up 21% from the previous quarter and up 629% from a year ago. Non-GAAP EPS was even more impressive, at $6.12, up 19% from the previous quarter and up 461% from a year ago.



Nvidia's data center segment, in particular, has been a significant driver of growth. The company reported record data center revenue of $22.6 billion, up 23% from the previous quarter and up 427% from a year ago. This growth is fueled by strong demand for generative AI training and inference on the Hopper platform, as well as the expansion of generative AI to consumer internet companies, enterprise, sovereign AI, automotive, and healthcare customers.

AI and Data Center Opportunities

Emerging technologies, such as AI and data centers, play a significant role in Nvidia's long-term growth potential. AI is a rapidly growing field that requires high-performance computing resources, and Nvidia's GPUs are well-suited for AI workloads. The company's data center revenue grew by 427% year-over-year in Q1 FY2025, driven by strong demand for generative AI training and inference on the Hopper platform. Additionally, Nvidia is investing in AI research and development, such as the Blackwell platform, to stay at the forefront of AI innovation. This investment is expected to create multiple multibillion-dollar vertical markets and drive future growth.



Expert Opinions

Many analysts remain bullish on Nvidia's prospects. Susquehanna analyst Christopher Rolland says that Nvidia's four segments—auto, data center, gaming, and professional visualization—could grow at a rate at least three times that of semiconductors generally. He upped his price target on the stock to $450 from $350. Needham analyst Rajvindra Gill also sees a bright future for Nvidia, noting that the company is shipping to true, AI-related demand near-term. He has a $460 price target on Nvidia shares.

Cautionary Notes

Despite the optimism, there are reasons to be cautious. Nvidia's stock is up over 90% in the past year, and while the fundamentals are strong, the valuation is not cheap. At 47.4 times 12-month forward earnings, the stock is by no means a bargain. Additionally, the company faces competition from other tech giants, such as AMD and Intel, which are also investing heavily in AI and data center technologies.



Conclusion

Nvidia's impressive growth and strong fundamentals make it an attractive investment. However, the stock is not cheap, and investors should be aware of the competition and potential risks. As always, it's essential to do thorough research and consider your risk tolerance before making any investment decisions.