There is no denying that 2024 was a record year Nvidia (NVDA -2.09%). The company cemented its position as the gold standard for graphics processing units (GPUs) that underpin artificial intelligence (AI), and the future continues to look bright. Since the AI ​​revolution began in early 2023, the stock has gained more than 850%, and this year alone it has gained 182%.

But that doesn’t tell the whole story. Although the company’s business has continued to grow over the past six months, Nvidia’s stock has risen Price has stalled. Concerns about future AI adoption, the specter of competition and a high valuation have sidelined some investors, wondering whether the company’s best days are behind it.

Let’s look at what’s ahead for Nvidia and whether the stock still represents a compelling opportunity for investors as we enter the new year.

Image source: Getty Images.

There are plenty of catalysts

There are a number of catalysts that could move Nvidia stock in early 2025, so investors should mark their calendars.

CEO Jensen Huang is something of a rock star in the investing community. The popular CEO tends to generate excitement with his public addresses, which has the potential to influence Nvidia’s stock price. One such appearance is the opening of the Consumer Electronics Show (CES), where Huang will give the keynote speech on January 6th.

Huang has his finger on the pulse of the tech industry and is expected to share his views on the pace of AI adoption and the state of technology in general. Perhaps more importantly, it is likely that he will also provide an update to Nvidia’s Blackwell platform upon request. The next-generation processor, designed specifically for AI applications, was expected to ship early this month. Huang has previously described demand for the chips as “insane,” so expectations are high and any positive update is likely to give the stock a boost.

Actually, City Analyst Atif Malik put Nvidia on a “positive catalyst watch” ahead of Huang’s appearance. The analyst maintains his Buy rating and $175 price target, suggesting a potential upside of 25% compared to Tuesday’s closing price. Malik believes an update on Blackwell’s sale and the potential for higher margins could push the stock higher.

It’s worth taking a moment to consider investors’ concerns about Nvidia’s margins. The company’s gross profit margin reached an all-time high of 78.4% in the first quarter of fiscal 2025 (ended April 28). However, in the following two quarters, these margins fell to 75.1% and 74.6%. Management attributed these declines to “inventory reserves” related to the impending launch of Blackwell and expects a gross profit margin of 73% for the current quarter. In some cases, declining profit margins can be a warning sign over the longer term, but a decline over two quarters is too small a sample for investors to worry about – especially after record-breaking performance in the first quarter and subsequent product launches.

The biggest potential catalyst on the horizon is Nvidia’s fourth-quarter fiscal 2025 financial report, scheduled for release on February 26. Management expects revenue of $37.5 billion, which would represent growth of about 70%, although Nvidia has a long history of issuing conservative guidance. For example, after giving a 79% growth forecast for the third quarter, Nvidia delivered growth of around 94%. If Blackwell shipments turn out to be more robust than expected – and history suggests they are – the company could beat Wall Street’s expectations, which could also drive Nvidia stock higher.

Finally, investor fears that AI adoption could stall appear overblown. A study by Big Four accounting firm PwC estimates that AI has the potential to contribute up to $15.7 trillion to the global economy by 2030. In fact, data suggests that up to 45% of all economic gains during this period could be the result of AI-powered product improvements that trigger additional consumer demand.

Should investors buy Nvidia before 2025?

There’s one final reason investors should consider buying Nvidia stock before 2025 – its valuation – but that requires some context.

Earlier this year, when the AI ​​excitement was at its peak, Nvidia shares sold for 83 times earnings. However, over the past year, that value has steadily declined, and the stock currently sells for 55 times earnings. While this still seems expensive at first glance, it is worth putting it into historical context. Over the past decade, Nvidia has had an average price-to-earnings (P/E) ratio of 59, showing that the current value is historically cheap.

Additionally, Nvidia is expected to generate earnings per share (EPS) of $4.43 in fiscal 2026, according to Wall Street. That’s just 32 times next year’s expected earnings, which is an attractive valuation for a company with such an excellent growth record.

Taken together, Huang’s upcoming CES appearance, the blockbuster potential for Nvidia’s next-generation Blackwell AI processor, margin improvement potential, compelling valuation and the company’s pivotal role in recent AI advances suggest that it There is potential for upside in the short term.

However, investors who want to make money quickly should be careful. Any of the above catalysts could go in the opposite direction and send the stock plummeting lowerat least temporarily.

Here’s the thing: If, like me, you believe that AI has the potential to transform industries and that Nvidia is one of the main beneficiaries of this trend, then buy Nvidia stock and wait for the wild ride ahead. It doesn’t matter if you buy the stock before 2025 – as long as you buy it.