Nvidia Poised for $130 Rally, Analyst Predict Relief After 27% Slide

Nvidia's stock has been on a rollercoaster ride in 2025, with a recent 27% slide that has left investors wondering if the tech giant can regain its momentum. Despite this setback, analysts are predicting a $130 rally, driven by several key factors that align with Nvidia's current financial performance and market position.

First and foremost, Nvidia's dominance in the AI and GPU market is a significant driver for the predicted rally. As of the first quarter of 2024, nvidia owned 88% of the GPU market, a substantial increase from the previous quarter's 80% market share. This dominance in AI-capable chips and related software positions Nvidia as a leader in a rapidly growing market.



Nvidia's financial performance has been nothing short of exceptional. In the first quarter of fiscal year 2025, the company generated $26 billion in sales and non-GAAP diluted earnings per share of $6.12. Relative to the prior-year quarter, sales grew 262% and non-GAAP diluted EPS was up 461%. The company also increased its gross margin by 12.1 points. Over the past 18 months, Nvidia has quadrupled its annual sales, added nearly 20 points to its gross margin, and increased non-GAAP diluted EPS by more than five times. The stock price has gained nearly 500% as a result.



Three growth drivers for Nvidia include its Blackwell platform launch, government demand for AI hardware, and data center demand for hardware that supports multiple use cases, such as AI and 5G RAN. The Blackwell GPU architecture incorporates multiple innovations to trim the energy consumption required for developing, training, and running large language models (LLM). Nvidia says the platform will lower costs and energy consumption by up to 25 times. Although the chip launch has been pushed back due to a design flaw, Meta Platforms (META), Alphabet (GOOG), and Microsoft (MSFT) are rumored to have Blackwell orders in place valued at tens of billions.

Nvidia's forward-thinking culture and innovation mindset have positioned the company as a leader in AI technology. CEO Jensen Huang identified AI as the company's next big opportunity roughly a decade before the masses had heard of ChatGPT. Thanks to Huang's forethought and vision, Nvidia has established a dominant first-mover position in a technology that could revolutionize the way business is done.

Major market opportunities for Nvidia include the AI chip market, which is expected to be worth $311 billion by 2029, according to MarketsandMarkets. This translates to a compound annual growth rate of 20.4% from 2024. Applying that growth rate to Nvidia's data center sales, assuming the current annual run rate of about $90 billion, equates to more than $225 billion in AI-related sales by 2029. That alone could justify another doubling of Nvidia's stock price by 2029, assuming the margins don't degrade terribly.

However, the recent 27% slide in Nvidia's stock has significantly impacted investor sentiment and confidence in the company's long-term growth prospects. This decline is attributed to various factors, including Donald Trump's tariffs, which have triggered a rotation out of tech stocks. To regain investor trust, Nvidia can employ several strategies, including continuing to invest in research and development, diversifying its revenue streams, forming strategic partnerships, maintaining transparent communication, and engaging with governments to advocate for supportive policies.

Potential risks and challenges that could hinder Nvidia's ability to achieve the predicted rally include the impact of tariffs, intense competition in the semiconductor industry, the sustainability of AI spending, and market volatility. To mitigate these risks, Nvidia can diversify its supply chain, continue to innovate, expand its product offerings, maintain a strong balance sheet, and focus on expanding its product offerings and diversifying its revenue streams.

In conclusion, while the recent slide in Nvidia's stock has raised concerns, the company's strong market position, financial performance, and growth prospects support the predicted rally. By addressing the challenges and mitigating the risks, Nvidia can regain investor confidence and achieve sustained growth.