Should you buy Nvidia before 2025? The evidence is piling up, and here's what it says.

Nvidia (NASDAQ:NVDA) has catapulted itself to the top of the stock charts this year. Shares are headed for a nearly 190% surge for the year’s top performance Dow Jones Industrial Averagethe second best performance in the Nasdaq 100and the third-best performer in the S&P 500. And the reason for these gains is clear: Nvidia has built an empire in one of today’s hottest industries. I’m talking about artificial intelligence (AI), a market that is expected to grow from $200 billion today to $1 trillion by the end of the decade.

The technology giant makes the powerful chips the key to the development of AI projects as well as an entire portfolio of related products and services. And this has helped sales reach record levels. Sales reached $35 billion in the most recent quarter, higher than in a full year just two years ago.

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Given the company’s momentum, should you buy Nvidia before 2025? The evidence is accumulating and supports a particular answer.

An investor makes notes in a notebook at home in a room decorated for the holidays. — Image source: Getty Images.

But before we get to that, let’s look at Nvidia’s history so far. This company wasn’t always an AI giant. Video games used to be powered by Nvidia’s graphics processing units (GPUs). When it became clear that their ability to handle many tasks at once would be useful in other areas, Nvidia made it possible. The company launched the parallel computing platform CUDA, and the GPU expanded its reach and soon became the star of the AI revolution.

In most of Nvidia’s recent quarters, the company’s profits grew by triple digits. In the last quarter, that growth slowed to double digits – but that’s not surprising considering that comparable quarters have become quite difficult. For example, revenues rose to $18 billion in the third quarter of last year. In the most recent third quarter, it rose 94% from that level.

Importantly, this story is not just about sales, but also about profitability. Nvidia has demonstrated its ability to generate high revenue profits with a gross margin of more than 70%. And the company even expects these high margins to continue in the coming weeks and months with the introduction of its new Blackwell architecture. This is impressive because product releases involve additional costs and early-stage companies are generally not at the most cost-effective level.

Now let’s consider whether you should buy this promising stock before the new year. One reason you might be hesitant is that while Nvidia’s margins will remain strong during the launch phase, the company will still be going through a transition period. Nvidia said a perfect start will put some pressure on gross margins, pushing them down to the low 70 percent range starting in the mid-70s. This, combined with the fact that Nvidia has surged in 2024, could prompt investors to immediately turn to other stocks with greater potential for explosive growth.

However, even after Nvidia’s impressive earnings and stock price performance in recent quarters, the company may still be in the early stages of its growth story. As I mentioned earlier, the entire AI market is set to boom in the coming years. And Nvidia CEO Jensen Huang has repeatedly emphasized that as part of this shift to accelerated computing, about $1 trillion will need to be spent on data center modernization over the next four to five years.

Meanwhile, Nvidia’s upcoming Blackwell launch, along with future chips that the company plans to update annually, should help drive these developments. And that means a whole new era of growth may be upon us.

With that in mind, mounting evidence shows us that it’s a good idea to get on board with Nvidia as soon as possible – to take advantage of this new wave of growth starting as early as this quarter. Nvidia expects the company to exceed its forecast of billions of dollars in Blackwell revenue during this period.

Of course, buying Nvidia after the new year could clearly be worthwhile in the future. A stock’s short-term performance generally doesn’t have much impact if you hold it for the long term – and that’s the best way to invest. So you don’t necessarily have to rush out and buy Nvidia shares right away to avoid missing out. However, if you’re looking for stocks before the end of 2025, there’s evidence that Nvidia is a fantastic company to add to your list.

Before you buy Nvidia stock, consider the following:

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in Nvidia and recommends it. The Motley Fool has a disclosure policy.

Should you buy Nvidia before 2025? The evidence is piling up, and here’s what it says. was originally published by The Motley Fool

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Should you buy Nvidia before 2025? The evidence is piling up, and here’s what it says.

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