Nvidia reported solid financial results for the second quarter, but the stock has tumbled 20% from its high. The downturn was fueled by concerns about the sustainability of the artificial intelligence (AI) boom and the delayed launch of Blackwell, Nvidia’s next generation of data center chips. Despite the current dip, Nvidia is still on pace to be a $10 trillion company by 2030, according to Beth Kendig, lead technology analyst at the I/O Fund.
“Early next year will be fireworks again for Nvidia, and we will be on track for that $10 trillion,” she said. Former hedge fund manager and current Mad Money host, Jim Cramer, shares a similar sentiment. “I stand by my view that you should own Nvidia stock and not trade it,” Cramer recently reiterated.
Nvidia currently has a market valuation of $2.6 trillion, implying a 285% upside according to projections set by Kendig and Cramer. Nvidia is renowned for its graphics processing units (GPUs), which perform complex calculations much faster than central processing units (CPUs). The company accounted for 98% of data center GPU shipments last year, according to analysts, and its GPUs made up over 80% of AI processors.
Nvidia’s real strength lies in its combination of cutting-edge hardware and proprietary CUDA software. The CUDA platform consists of over 400 software libraries that streamline GPU application development across a broad range of disciplines.
nvidia stock and delayed Blackwell impact
Last week, Nvidia reported excellent financial results for the second quarter of fiscal 2025 (ended July 2024). Revenue increased 122% to $30 billion, driven by strong demand for AI hardware and software. Meanwhile, non-GAAP net income surged 152% to $0.68 per diluted share.
In August, The Information reported that Blackwell GPU shipments would be delayed due to design flaws discovered unusually late in production. Nvidia CFO Colette Kress provided context on the recent earnings call: “We executed a change to the Blackwell GPU mass to improve production yields. Blackwell production ramp is scheduled to begin in the fourth quarter.”
Wall Street analysts expect Nvidia’s adjusted earnings to grow at an annual rate of 49% through fiscal 2026.
This makes its current valuation of 48 times adjusted earnings look reasonable. The $10 trillion target by 2030 set by Kendig and Cramer may be achievable if earnings increase at 36% annually. Nvidia’s current dip presents a potential buying opportunity for long-term investors.
With its strong position in the AI market and promising future products like the Blackwell GPUs, Nvidia has the potential for significant growth. However, investors should stay informed and exercise caution, given the unpredictable nature of the tech industry.
Rashan is a seasoned technology journalist and visionary leader serving as the Editor-in-Chief of DevX.com, a leading online publication focused on software development, programming languages, and emerging technologies. With his deep expertise in the tech industry and her passion for empowering developers, Rashan has transformed DevX.com into a vibrant hub of knowledge and innovation. Reach out to Rashan at [email protected]
