It’s been a bumpier ride for shares of AI chip titanNvidia(NASDAQ:NVDA) over the past year, but the ride has been worth staying on, at least so far. With the stock up 50% in the past year or just over 31% year to date, the pace of gains has been relatively modest. Despite this, there are still more than a handful of bulls who view the nearly $4.5 trillion Magnificent Seven giant as having enough gas left in the tank to move the needle higher.
Indeed, it’s still been a hot year of growth, but given where expectations stood going into 2025, that translated to a decent, but not meteoric, first three quarters of gains. In any case, the GPU top dog has a ton of capital to invest in initiatives well beyond its own to capitalize on the AI boom as well as other rising tech trends, such as the Omniverse, robotics, and even quantum computing. Indeed, whenever Jensen Huang remarks on the state of quantum computing, the stocks in the space tend to react massively.
Key Points
- Nvidia stock might not be as scorching hot this year, but it’s tough to be anything but bullish as the firm invests in other AI bets.
- It might not be all too long before NVDA stock hits the $6 trillion market cap level, especially if the AI trade is ready to sprint into 2026.
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Nvidia has been making some big deals across the AI space of late. Don’t discount them.
With a handful of notable investments made by Nvidia in recent months, including the $100 billion stake in ChatGPT maker OpenAI, it seems like Nvidia is well-equipped to capture more of the upside from the software side of AI. If Nvidia does continue to make more such strategic bets, it’s about time that investors think of the firm as more than just a GPU maker. Now, Nvidia already has a powerful software ecosystem that’s fuelled momentum in its hardware business.
At the end of the day, you need good software and tools to make the most of the hardware. With the Nvidia Cosmos Platform showing early promise as an ecosystem ahead of the potential rise of physical AI, it seems like Jensen Huang and his team are already ready for the next wave and the wave after that. In any case, I think it’s Nvidia’s software lineup that helps spin the hardware flywheel as fast as it can go.
With Wedbush Securities analyst Dan Ives recently setting his sights on a $6 trillion market cap and the next phase of the AI spending “wave,” I don’t think the current Street-high price target of $250 per share is unreasonable in the slightest. Perhaps the most striking thing that Ives said about Nvidia is that the firm may stand to benefit from a revenue “multiplier” effect from the amount of capital the GPU titan puts up. I couldn’t agree more.
Perhaps it’s Nvidia’s latest spending spree that could help drive upward momentum in the shares until its next big product works its way into a future quarter.
It’s not just about the OpenAI investment
It’s not just the $100 billion bet on Sam Altman’s OpenAI that makes Nvidia an even more powerful force in AI. The company’s big bet onIntel(NASDAQ:INTC), I believe, is a fantastic deep-value bet that could pay off significantly as the sagging semi firm looks for help to get back on its feet. As Intel explores more investments from other tech titans across the AI scene, it’s looking like Intel’s future stands to be a lot brighter than just a few months ago.
Undoubtedly, the big-league bets on OpenAI and Intel are going to be making headlines. However, it’s the deals that don’t get all too much coverage that also stand to be major difference makers over the long term. Take the relatively small $700 million Nscale deal or the slew of strategic bets under $1 billion (think LLM firms like Mistral AI and Cohere) the firm has made in recent years. Indeed, Nvidia has spread its chips quite nicely across the AI table. And with Jensen Huang likely giving his blessing to each one of the bets, I’d many of the smaller bets have the potential to stand out as a huge winner.
Many analysts are still pounding the table
It’s lonely to be in the camp that’s anything less than bullish these days, with Nvidia continuing to defy expectations while getting the AI investment crowd hyped up with recent investments. With Loop Capital hanging onto its $250 price target, which entails a 38% move from here, I’d be inclined to stay the course as the firm runs into what Loop sees as a “Golden Wave” as demand for AI chips and gear for data centers stays hotter for a while longer.
It’s not just superior chips that could cause Nvidia to keep growing faster than its much smaller rivals. Smart investments (like in OpenAI, Intel, and smaller, lesser-known LLM makers) and powerful software also make Nvidia an undisputed AI champion. Though NVDA stock may very well be on its way to $250, investors shouldn’t expect a smooth ride higher, especially if AI bubble fears amplify with every up day in markets.
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