The past two years have been absolutely incredible for investors Nvidia (NASDAQ: NVDA) as the semiconductor giant's shares more than doubled in both 2023 and 2024, rising 860% since the start of last year thanks to the effects artificial intelligence (AI) has had on the company's revenues and profits.
In December 2023, I discussed the reasons why Nvidia stock could double in 2024. These include robust demand for its graphics processing units (GPUs) for AI model training and inference, and the steps taken by its manufacturing partner, Taiwanese semiconductor manufacturing (NYSE: TSM)to increase supply.
In this article, I'll look at Nvidia's catalysts for 2025 and consider why this high-flying chipmaker could double in value again in the new year.
The company's latest generation of GPUs, built on the Blackwell architecture, will be the biggest growth driver in 2025. Management said during the November earnings conference call that these chips are in full production and shipping to customers.
Blackwell-related revenue for the current quarter should exceed expectations thanks to a strengthening supply chain. The company also said demand is well above supply. This bodes well for Nvidia as it enters the new year, as TSMC says it will significantly increase production capacity of advanced AI chips by 2025.
Market researcher IDC expects TSMC to be on track to double its advanced chip-on-wafer-on-substrate (CoWoS) packaging capacity to 660,000 wafers to meet demand from Nvidia and other AI chipmakers. Nvidia has reportedly cornered 60% of TSMC's CoWoS capacity by 2025, so it should be able to substantially increase the output of its Blackwell processors.
In October 2024, Morgan Stanley analysts said Blackwell GPUs will sell out in the next twelve months (according to a report on the Tom's Hardware website). That wait time will likely decrease based on TSMC's outlook, allowing Nvidia to fulfill more orders and see a big jump in data center revenue. According to Morgan Stanley, the company is expected to ship between 60,000 and 70,000 Blackwell B200 server systems by 2025. Each system is expected to cost between $2 million and $3 million. That suggests the Blackwell systems could generate somewhere between $120 billion and $210 billion next year, or $165 billion at the midpoint.
Analysts expect Nvidia to generate revenues of $195 billion in fiscal 2026 (which coincides with the eleven months of calendar 2025), a 51% increase over the current fiscal year's expected revenues of $129 billion. However, the potential revenue from Blackwell's sales and the fact that Nvidia will continue to sell its previous-generation Hopper chips indicate that it could easily exceed Wall Street's growth expectations, setting the stage for a doubling of the share.
