A wave of AI uncertainty and valuation concerns have stopped this highflier in its tracks, but lightning gains could be on the horizon.
U Dow Jones Industrial Average is the oldest stock market index in the United States. This price-weighted index tracks the performance of 30 of the largest stock companies in the country. Its constituent companies span a variety of industries and sectors, and it is considered by many to be a reliable indicator of the health of the economy and the performance of the stock market in the United States.
Nvidia (NVDA 3.08%) is the most recent addition to the Dow, a move that some investors thought was long overdue. The chipmaker joined the iconic index at the beginning of last month and has gained 163% so far this year (at the end of this writing), making it the best performer of the Dow.
Despite its top performance, some investors have concerns about the future of artificial intelligence (AI) and Nvidia’s seemingly frothy valuation. These questions have weighed on the stock, which has been essentially flat over the past six months. While some investors are skeptical, I am not among them. In fact, Nvidia is my top belief stock in 2025. Let’s look at the available evidence to understand why Nvidia could still produce blistering gains for astute investors.
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The pioneer of AI processing
Nvidia originally developed the graphics processing unit (GPU) to render realistic graphics in video games, a task that required tremendous computational power. At the time, the GPU provided a new solution, breaking down a massive computational task into smaller, more manageable chunks.
Nvidia quickly discovered that the solution, known as parallel processing, worked equally well for other computationally intensive tasks. The company began marketing GPUs for high performance computing (HPC). The biggest breakthrough came in 2013 when researchers used GPUs to power deep learning, a predecessor to modern AI. CEO Jensen Huang understood that AI was the future and positioned Nvidia to reap the rewards.
The move was prescient. Most artificial intelligence processing takes place in the data center, and Nvidia would control about 98% of the data center GPU market by 2023, according to semiconductor analyst firm TechInsights. While that share is expected to moderate a little when the books are closed in 2024, Nvidia is expected to be the leader of the industry by a wide margin.
The numbers are persuasive
There’s no denying that Nvidia has been an early beneficiary of the growing adoption of generative AI. Even in the face of the hard and triple components of last year, his recent results were enviable. For its third fiscal quarter 2025 (ended October 27), Nvidia generated a record revenue of $ 35 billion, which increased 94% year-on-year and 17% sequentially. This resulted in adjusted earnings per share (EPS) of $0.81, which increased 103%.
A performance of that magnitude suggests that AI adoption continues at a brisk pace. Yet despite its record results, the slowdown in growth has convinced it that the initial opportunity has passed – but the evidence suggests otherwise.
Does AI have staying power?
A report from the Wharton School of Business found that companies are beginning to transition from “initial excitement to deeper experimentation” to better understand the best way to implement AI to benefit their businesses.
In addition, a survey of 800 business leaders found that the weekly use of generative AI increased from 37% in 2023 to 72% in 2024. The most common use cases include data analysis, contract drafting and idea generation, and leaders identify more targeted. applications, which will continue to drive AI adoption for years to come.
Looking closer to home, comments from Nvidia’s biggest customers provide compelling evidence that the AI revolution is underway. During their respective earnings calls with analysts, Amazon, Microsoft, Alphabetand Meta Platforms is committed to continuing to spend heavily on AI, with most of that spending allocated to the servers and data centers that facilitate the technology.
As the undisputed leader in the data center GPU space, Nvidia will likely win the lion’s share of that spending.
Enter Blackwell
Nvidia’s stock has soared over the past two years as its processors have become the gold standard for AI, cornering the data center GPU market – where most of the processing AI takes place.
The company’s Blackwell family of AI-centric data center chips will begin shipping later this year, taking AI to the next level. Just last month, CFO Colette Kress said: “The demand for Blackwell is amazing, and we are racing to scale the offering to meet the incredible demand that customers are asking us.”
Beth Kindig, CEO and principal technology analyst for the I/O Fund, estimates that in the coming year, Blackwell chips will outsell all of Nvidia’s data center GPU sales for the past two years — combined. That could drive up to 70% for Nvidia shares in 2025.
The evidence is clear
Together, their robust results, the ongoing adoption of AI, and Nvidia’s dominance in the data center GPU market suggest that the future looks extremely bright for the GPU maker.
While some investors are concerned about the stock’s valuation, this also requires context. Nvidia currently trades for 51 times sales, which seems expensive at first glance. However, over the past 10 years, Nvidia’s average price-to-earnings (P/E) ratio has risen to around 59, which suggests that the current price is historically cheap. Additionally, Wall Street expects Nvidia to generate EPS of $4.43 in fiscal 2026 (which begins at the end of January). That works out to about 29 times forward earnings, which is an attractive price to pay for a company with so much potential.
That’s why Nvidia is my top 2025 stock.
John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool has positions and recommends Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 call on Microsoft and short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.