Skip to main content

NVIDIA stock forecast 2025: NVDA is worth long-term investment


We know that technology is the future of mankind.

 In the past 40 years, there has been a major technological change almost every 10 years, and every technological wave has brought new winners, and some people have become rich as a result. For example, in the personal computer era, IBM and Microsoft became popular, and the mobile Internet era became Apple and Google. And we are now at the crossroads of technological change. As investors, whoever can grasp the next technological change will be more likely to be the winner in the next 10 years.

 So what will the upcoming technological change be? I think it will be artificial intelligence AI. This is not what I said by myself. Catherine Wood, president of Ark Fund, believes that AI will be an industry in the future. Various research reports by investment banks Goldman Sachs and Morgan Stanley have also regarded AI as the most important investment layout in the next 10 years. So here comes the problem. Who will stand out from the AI ​​technology wave in the next 10 years?

 Before answering this question, let me tell you a short story. In the past, a gold mine was discovered in the central part of the United States. Many gold prospectors came here to find a gold mine. However, the people who rushed to mine basically didn't get any gold. On the contrary, the people who sold the gold shovel by the gold mine finally made money. The current AI industry is very much like a gold mine. All companies want to come in, but the problem is that their uncertainty is too high. Like the Baidu we talked about in the previous issue, it is representative of high ceilings but strong uncertainty. The company in the AI ​​industry that we are going to talk about today is just the opposite of Baidu. He can be said to be the strongest gold shovel in the AI ​​gold mine. He may not have such an exciting upper limit, but he is extremely certain. If you want to layout the AI ​​industry, he is definitely a company that cannot be missed.

 This is Nvidia, stock code NVDA.

 Because Nvidia’s stock price has recently been overbought severely, if you only focus on short-term K-line, then this stock is definitely not for you. But if you want to understand NVIDIA's investment logic, and use this to understand the future opportunities of the AI ​​industry. Then I promise you will gain something after reading this article.

 NVIDIA and artificial intelligence

 Some people may not understand, how can Nvidia, a graphics card company, become an AI company? To answer this question, we have to start with the history of Nvidia. Six years ago, Nvidia’s focus was mainly on providing high-performance graphics cards, or GPUs, to the gaming industry. At that time, Nvidia could only be regarded as a screw in the chip design industry, and no one took him seriously. But later, when AI technology appeared, people found that GPUs are more suitable for AI calculations than traditional CPUs. Because of the neural network and deep learning required by AI, a large number of matrix operations are required, and this is the strength of the GPU. The wave of technological change hits Nvidia, and opportunities are reserved for those who are prepared. Nvidia executives keenly sensed the potential for mutual cooperation between AI and GPU and decisively turned the company's strategy into a comprehensive layout in the AI ​​industry. To this day, Nvidia can be said to be the well-deserved overlord of the entire AI industry infrastructure.

 Nvidia's dominance can be discussed in terms of hardware and software. From the hardware point of view, GPU will be the future of increased computing power. It can be seen that the development of traditional CPUs has reached a bottleneck due to physical limitations, and performance can only increase by 10% per year. On the basis that GPU has surpassed CPU in current computing power, there is still high room for improvement in the future. It is expected that in 2025, it will be increased to 1,000 times the current level. As a technology that strongly relies on computing power, AI will only become more and more dependent on GPUs. And Nvidia will undoubtedly be the biggest beneficiary.

 Nvidia's GPU accounts for 80% of the entire market share, and Nvidia also accounts for 70% of the world's top 500 supercomputers. The only competitor, AMD, is not only far lower than Nvidia in terms of market share, but the gap in technology is even greater, especially for GPUs used in AI. Nvidia occupies nearly 100% of the market. Although there are still a few sporadic competitors in the AI ​​chip field, such as the TPU developed by Google specifically for AI, and an upgraded version of Apple's possible future M1 chip, Nvidia's leading position is very solid. In the foreseeable future, as long as AI still needs GPU to process data, NVIDIA will be the best company selling a gold shovel.

 NVIDIA's layout and development

 For the future of NVIDIA in the AI ​​industry. To layout the AI ​​industry, you need to think about two things. One is the disruptive changes brought about by AI technology itself. The other is the rapid expansion of the AI ​​industry as a whole. The most frightening thing about AI technology is that it will naturally form a competitive environment where the strong are always strong. Although the initial development is time-consuming and labor-intensive, once completed, his competitive advantage will be beyond the reach of latecomers. Companies like Baidu and Google, the AI ​​industry leader, are typical of this type of company. But Nvidia is different. He does not have an advantage in AI technology, so there will be no exciting explosive growth. The logic of investing in it is to value the rapid expansion of the AI ​​industry as a whole and to achieve growth by selling gold mining shovels with stronger certainty. This growth rate will be considerable, and the upper limit is also very high. If you are after certainty, then Nvidia will be a better AI layout.

 Nvidia's certainty is not only reflected in its AI layout. He also used the powerful computing power of his GPU to deploy many other cutting-edge technologies to make his business more decentralized. Once the gold-digging shovel is hard to sell, he still has a silver digging shovel to dig a copper shovel. Since we are analyzing the company Nvidia, we cannot do without those, except for AI, Nvidia's other layouts.

 First of all, we must be clear that the traditional game business will still be the main source of Nvidia's revenue for a long time to come. The game industry currently accounts for 47% of Nvidia's total revenue, and Nvidia also relies heavily on the development of this part of the business. And the game industry is not stagnant water, his development speed is still very fast. The excitement of future development lies in the popularization of VR and AR games. Moreover, the update of game GPUs is very fast, and product performance needs to be improved every two or three years, which also leads to the continuous increase in demand for game GPUs.

 Gaming is the traditional business of NVIDIA, and it is the guarantee of NVIDIA's fundamentals. But what is even more exciting is the three emerging industries that Nvidia is deploying. Each of these industries may be a trillion-level market in the next 10 years and 20 years, which is no less than its AI deployment potential.

 The first industry is cloud computing.

 Just as AI companies cannot do without the GPU provided by Nvidia, the cloud computing field also relies heavily on Nvidia's hardware support. In 2019, 97.4% of AI accelerators in the world's top four cloud providers AWS, Azure, Google Cloud, and Alibaba Cloud used Nvidia GPUs. The cloud computing industry still has high room for growth, and the demand for NVIDIA GPUs will only increase.

 The second industry is a digital currency.

 Since Nvidia GPU provides powerful matrix computing power, it is very suitable for Ethereum mining. And it is also difficult to find alternatives. Nvidia also designed a dedicated GPU specifically for Ethereum miners. I believe I don’t need to say more about the development potential of digital currency. Some analysts predict that mining GPUs will be a $5 billion market in 4 years, which is equivalent to 1/3 of Nvidia’s current revenue. The future potential cannot be underestimated.

 The third industry is autonomous driving.

 Autonomous driving is currently the smallest part of Nvidia's revenue, but it is also the most potential part. At present, NVIDIA cooperates with many automakers in autonomous driving, including well-known manufacturers such as Mercedes-Benz, Hyundai, Volvo, and NIO. They are building an open-source platform to provide the automotive industry with an infrastructure that can develop autonomous driving on its own. In the future, they will also develop their own autonomous driving systems. This part of the business has high potential but strong uncertainty. In my opinion, it is feasible to build an open-source autonomous driving research and development platform, but I am skeptical of developing autonomous driving technology.

 It can be seen that NVIDIA is relying on its own hardware advantages to actively deploy cutting-edge technologies with the most development potential. It is not important to him whether to dig gold or not, so he concentrates on doing a good job in the business of digging gold shovels. And it seems that Nvidia's layout effect in these cutting-edge technology industries is pretty good. The financial report shows that Nvidia's data center business, that is, the layout of AI and cloud computing, has grown at an average annual rate of 80% in the past five years. And this speed will continue to increase because of Nvidia's ever-increasing competitive advantage.

 NVIDIA's risk

 Of course, there are not only opportunities for any company. Nvidia’s investment risk is also something we must understand. In the short term, Nvidia will face two major risks. If anything goes wrong, Nvidia's stock price will fluctuate.

 The first is the acquisition of ARM mentioned above. This acquisition is very important to Nvidia, but it is still a big question mark that it can finally be realized. The ARM company involves many interest groups, and the chip is an extremely sensitive industry in the global political game. If an ARM is bought by an American company and is to be built into a super chip giant, then the interests of technology giants including the United Kingdom, the European Union, China, and the United States may all be harmed. Therefore, if any party intervenes, the acquisition cannot be completed.

 The second risk is the fluctuation of digital currency prices. Now NVIDIA has made a deep layout in the digital currency industry, and its stock price is also strongly correlated with the price of digital currency. Once the price of digital currency falls sharply, then Nvidia's stock price will inevitably be affected.

 In the long run, Nvidia also faces two major risks.

 The first is potential competition. Although at present, Nvidia is the absolute leader in computing power. But with the rapid development of science and technology, no one can guarantee that NVIDIA can maintain such a monopoly for a long time. For example, currently, in the AI ​​field, there is a TPU specially developed by Google for AI to threaten Nvidia's position. In the field of autonomous driving, Intel is also developing its own chip Mobileye. In the field of cloud computing, Amazon has also launched its self-developed chip Graviton. Major giants are seizing this market one after another, and it is not easy for Nvidia to maintain its monopoly position.

 Second, as far as the AI ​​industry is concerned, how fast it is developing is still unknown at present. The AI ​​industry has a high ceiling, but it is still restricted by many factors such as funding, training time, computing power, and commercialization, and it has not been able to release its potential. Although Nvidia has a high degree of certainty in selling gold mining shovels, there is still uncertainty when it will start selling on a large scale.

 NVIDIA's financial performance

 After talking about Nvidia's business model, let's analyze the financial report. From the financial report, we can see that it has the characteristics of strong profitability and rapid growth. Since it began to deploy AI and other emerging technology fields in 2016, NVIDIA's revenue has grown at an average annual rate of nearly 30%, and its annualized profit growth rate has reached as high as 63%. The most surprising is the growth of its gross profit margin. In the past 12 years, Nvidia's gross profit margin has nearly doubled, from 34.3% in 2009 to 62.3% in 21, which is not easy for a hardware design company.

 Nvidia can achieve this growth rate mainly for two reasons. One is because GPUs have continued to be in short supply in recent years. After Nvidia has higher bargaining power, profits have risen. The second is derived from Nvidia's data center business, which is the layout of AI and cloud computing. The gross profit margin of this business is extremely high, and in recent years, it has grown at an average annual rate of 80%. While the proportion is getting higher and higher, it has also accelerated the improvement of Nvidia's overall profit margin.

 Another noteworthy point of Nvidia’s financial report is its R&D expenditures. Nvidia has today's position, and its technological advantages are indispensable. To maintain such advantages, continuous R&D investment is essential. As can be seen from the figure below, Nvidia’s R&D expenditures account for more than 20% of total revenues throughout the year. What's even rarer is that with the increase in revenue in the past two years, this ratio has risen instead of falling. In horizontal comparison, Nvidia's R&D expenditure ratio far exceeds that of companies like Tesla, Google, Baidu, and Intel that also rely on technological advantages.

 At the same time, it also analyzed the financial data of Nvidia's earnings quality, repayment ability, and other financial data, and the results were very satisfactory. No hidden dangers were found in the financial report.

 NVIDIA's valuation

 Finally, let's take a look at Nvidia's valuation. For companies like this, with deep moats, high-speed growth, and strong certainty, they usually have one common feature, which is that is, expensive. Nvidia is no exception. Such a good company will naturally be sought after by capital. NVIDIA’s PS is 26 times, PE is 94 times, and PCF is 74 times. In contrast, Intel's PE is only 10 times, and AMD's PE is only 40 times. From the valuation point of view, Nvidia is not cheap. Although NVIDIA's growth rate and certainty far exceed its competitors. This may be related to the recent overbought of Nvidia’s stock price, or it may be due to investors’ increased expectations for Nvidia’s future growth. It can be seen that Nvidia's Forward PE will drop to 46 times in a year, which is still a very reasonable valuation range.

 Finally, my opinion on investing in Nvidia.

 As the most certain company in the AI ​​industry, I think Nvidia is a company that must be deployed. However, when the layout is the key. Recently, Nvidia’s share price has seen a strong increase. It is indeed very overbought and its valuation has also been overvalued. Let's see if long-term interest rates rise in the second half of this year, or after the Fed cuts QE, is there any chance? If you are worried about going short, you can consider buying small positions in batches. After all, investing in Nvidia is to agree with its layout in cutting-edge technology, and these benefits must be the most significant in the long term. Therefore, the difference between the current stock price of 10 yuan and 20 yuan is not a big deal in the long run.


Popular posts from this blog

TSM Stock Forecast and Price Target 2021

Today, I will analyze TSMC stocks in-depth with you. In the semiconductor sector, TSMC has always been my most promising stock. TSMC has just announced its results for the fourth quarter of 2020. At the same time, there are new developments in the entire chip industry recently. Therefore, today I will combine the financial report and chips. The latest developments in the industry to analyze the trend of TSMC stocks, First of all, we analyze TSMC’s fourth-quarter and full-year 2020 financial reports to see what are the key points worthy of investors’ attention. First, TSMC’s fourth-quarter revenue and profitability are very good.  Compared with the outlook for Q4 in Q3, the outlook at that time was US$12.4-12.7 billion, and the actual revenue was US$12.68 billion. Actual revenue As the upper limit of the outlook, the gross profit margin outlook is 51.5%-53.5%, while the actual gross profit margin is 54%, which is better than the outlook. The operating net profit margin is expected to be

INTC stock forecast 2025: Intel's acquisition of SiFive

SiFive, a chip design start-up company based on the RISC-V instruction set architecture, has received an acquisition intention from investor Intel.  A person familiar with the matter, who asked not to be named, said that Intel has offered to buy SiFive for more than $2 billion.  RISC-V with x86 and Arm  As we all know, Intel dominates the industry leader in x86 architecture chip technology, while SiFive focuses on open-source RISC-V technology and employs several founding members of the RISC-V architecture.  For a long time, the field of CPU instruction set architecture has been dominated by x86 and Arm. Since RISC-V was born at the University of California, Berkeley in 2010, it has gradually formed a certain competitive landscape with Arm after more than ten years of development.  With the gradual refinement of the application field, the model of one chip making the world has become a thing of the past. Facing the hot AI and Internet of Things market, RISC-V is becoming a semiconduct

Shopify stock forecast 2025:Is it worth buying?

  In the last year, the stocks rose relatively well. Another sector is e-commerce. Whether it is Amazon, Alibaba,, Pinduoduo, SEA or vertical e-commerce platforms Etsy and Chewy, all of them have experienced huge gains, while another category has benefited from the e-commerce sector.  The company is a website building tool company such as Shopify BigCommerce Holdings. Today I will talk about shopify, the leader of website building tools.  First, let's briefly talk about shopify's business model. To put it simply, shopify is a fool-like website building platform. In the past, when a company wanted to build a corporate website, it generally needed to find a dedicated person to design and maintain the website.  If you want to add shopping functions to the website, the cost of building the website will also increase. This is true for many small businesses and individual businesses.   A very difficult thing. Shopify uses the SAAS model to provide website building services.

Cloudflare's 4Q 2021 earnings report

 Just took a look at Cloudflare's (NET) 4Q 2021 earnings report. Cloudflare is in an area that covers several hot spots, including content delivery networks, i.e. CDNs, cloud computing, and cybersecurity. For the Cloudflare quarterly report, here is a summary: 1) Revenue of $194 million (then expected 4Q revenue in the range of $184 to $185 million), up 52% year-over-year ($172 million in 2021, up 51% year-over-year). 2) The number of customers continues to grow rapidly, with the total number of customers has reached 1416 (1260 in the previous quarter). 3) Non-GAAP gross margin was 79.2% vs. 78.1% in the same quarter last year (vs. 79.2% in 3Q vs. 77.3% in the same quarter last year.) Non-GAAP net income has started to turn around, meaning it has started to be profitable. 4) Revenue is expected to be in the range of $205 to $206 million in 4Q. That works out to about 6% YoY growth. Cloudflare had good results this time, beating its previous guidance. Revenues are still growing at a

TSMC VS Nvidia, AMD, Intel. How to choose semiconductor stocks?

The general pattern of the semiconductor industry, the overall trend and target price of TSMC in 2021, how the Nvidia(NVDA), AMD, and Intel(INTC) semiconductor stocks are laid out, what is the decisive factors, and whether there is a predictable time point, we conducted a more systematic discussion.  The big picture of the semiconductor industry The semiconductor industry is cyclical. Since the second half of 2019, global semiconductors have entered a new round of the business cycle. This is very important. Only when you understand this reason can you hold stocks with peace of mind. The following analysis is based on the time dimension. In the short term, looking at one to three months now, with the outbreak of the epidemic again, the production capacity of 8-inch wafers are in short supply, the semiconductor industry chain is out of stock, wafer foundry, packaging, and testing links have seen price increases, and production capacity is in short supply. High economic situation, In the

PLTR stock forecast 2025: Cathie Woods increased Palantir stock position

Software company Palantir (PLTR) released the latest quarterly earnings report, which performed very well.  After the financial report, Palantir's stock price soared to 14.64% at the highest point. At the same time, the keen Cathie Woods also bought $140 million in Palantir stock.  I won't talk about Palantir's specific business. If you don't know much about it, you can go back to my previous article.  Let's talk back to the financial report.  Benefiting from the benefits of the US government’s contract renewal, Palantir’s earnings per share and total revenue both beat expectations for this quarter’s earnings report.  Among them, earnings per share were $0.04, beating the expected $0.01; total revenue was 376 million, an increase of 49% from the same period last year, slightly higher than the expected $361 million.  Although the extent of beating expectations is not very large, the biggest highlight of the financial report is to broaden the business.   The value of

ARKK VS ARKW, ARKQ, ARKG, ARKF, How to choose ARK Innovation ETF?

Which ARK Innovation ETF is best? Let’s perform an Ark ETF review. Today, I will introduce to you the five actively managed ETFs in ARK INNOVATION. Let’s take a look at which types of companies they have invested in so that you can choose the industry you like to invest in. ARK INNOVATION was founded by Catherine Wood. This investment company is a revolutionary and innovative company that specializes in investment. Their company currently manages seven different types of ETFs, five of which are actively managed ETFs, and the other two One is an exponential passive ETF, Simply put, the biggest difference between these two ETFs is that for actively managed ETFs, they will frequently trade the company stocks in the fund, so the proportion of the company he holds will always change, while the index-type ETF is as they think. After purchasing the company, you will not be able to move it again. It is very similar to S&P500 or QQQ, except that the holding company is different. Then let

7 great investors' operating strategies to deal with the stock!

No one can be 100% sure about the outlook for the US stock market. Instead of entangled in whether the bull market in US stocks will end, it is better to think about what lessons can be learned from this plunge. Historically, due to the end of the summer market in September, U.S. stocks did not perform well. The plunge on Thursday sounded like a wake-up call for investors earlier. Be careful next week. Although Nasdaq is tolerant of faults The rate is high, but the up-and-down shock pattern has not changed, and there needs to be an established process. Investing in stocks should take a long-term view, have a long-term investment mentality, don't care too much about the rise and fall of one or two days, and don't feel unhappy because of the turmoil of the stock market, which affects the judgment of stock buying and selling. Today, let's take a look at how those familiar investment masters are invincible. The reason why masters become masters is that they have become masters

SNAP stock forecast 2025: Is it time to buy Snapchat?

In the US social networking industry, there are four listed companies. They are the famous Facebook, former US President Trump's favorite information publishing platform Twitter, photo sharing and social networking site Pinterest, and Snapchat, which is popular among young people. Most of them are between 25 and 55 years old and have used Facebook products more or less. But it is very new to Snapchat. In fact, Snapchat is a powerful challenger for Facebook. The greatest charm lies in rapid growth. In the past year, the stock price has risen from US$20 to more than US$70, and the company is now worth more than US$100 billion. Snap was founded in 2010 and is headquartered in California. The company's flagship product, Snapchat, is photo sharing and social networking software. The software comes from a "burn after reading" photo-sharing application developed by two students from Stanford University. In April 2011, founder Evan Spiegel introduced the idea of ​​his final p