Nvidia's Bright Future: Beyond Just Blackwell

Nvidia (NASDAQ: NVDA) has seen remarkable growth due to its strong performance in artificial intelligence (AI) sectors, causing the stock price to jump by 179% in 2024 so far. Currently, it trades at a high price-to-earnings ratio of 55, reflecting the high expectations investors have for the company as we move into the upcoming year.

A significant contributor to this growth is Nvidia's new Blackwell generative AI architecture, which is poised to drive future demand for the company's Blackwell graphics processing unit (GPU) chips. However, many analysts believe that the full impact of Blackwell may not be felt until the middle of next year. Nevertheless, Nvidia's recent financial results show considerable momentum from existing products, which supports its current valuation.

Robust Growth Across All Segments

In the third quarter of fiscal 2025, Nvidia reported an impressive 94% year-over-year revenue growth, primarily fueled by its data center division. Each segment of Nvidia's business experienced double-digit growth, including gaming (15%), professional visualization (17%), and automotive (72%). The automotive sector’s boost can be attributed to the rising demand for Nvidia's self-driving computing platforms.

Segment	Q3 Fiscal 2024	Q3 Fiscal 2025	YOY Change
Data center	$14.5 billion	$30.8 billion	112%
Gaming	$2.9 billion	$3.3 billion	15%
Professional visualization	$416 million	$486 million	17%
Automotive	$261 million	$449 million	72%
Other	$73 million	$97 million	33%
Total	$18.1 billion	$35.1 billion	94%

Data source: Nvidia. YOY = year over year. Nvidia's fiscal year ends in January.

Nvidia's next-generation Blackwell chips are currently in full production. Encouragingly, demand for the existing Hopper GPU technology is described as "exceptional". CEO Jensen Huang noted that roughly half of the data center sales came from cloud service providers which are increasingly adopting Nvidia's H200 chips to satisfy the surging need for AI capabilities.

As businesses continue to upgrade to the latest GPU technologies, Nvidia is well-positioned to maintain strong pricing power due to its position as a leading GPU supplier. As of now, Nvidia's net income over the last twelve months reached a staggering $63 billion!

Although the non-data center segments currently generate less revenue, their sharp growth indicates a promising outlook for Nvidia as it prepares for the introduction of its Blackwell chips. It's important to remember that just two years ago, gaming was Nvidia's largest revenue source. Recently, it managed a 15% year-over-year revenue lift, spurred by robust back-to-school sales for GeForce RTX-powered PCs, and the company is gearing up to meet holiday season demand.

The Stock's Value Proposition

Throughout this year, Nvidia's revenue has consistently exceeded its guidance by billions of dollars. If this trend remains, projections suggest the company could report between $39 billion and $40 billion in revenue for the next quarter, based on guidance indicating $37.5 billion. Analysts anticipate Nvidia will announce approximately $38 billion in revenue, reflecting a notable 72% increase year-over-year.

Nvidia management indicated they expect to ramp up shipments of Blackwell chips significantly over the next few quarters, suggesting that full revenue contributions from Blackwell may not emerge until the middle of the year. Market consensus estimates predict that Nvidia will experience a revenue growth rate of 49% in fiscal 2026.

Overall, the current demand patterns appear strong. Sustained interest in Hopper products and the gaming segment are likely to support a strong finish to the year, creating a positive momentum effect as Blackwell chip shipments start to increase. With the stock currently trading at 33 times the earnings forecast for next year, it seems like a valuable opportunity for investors considering this leading AI chip maker.

Nvidia, Growth, Stocks