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Why 2025 will be a leap year for Nvidia
Nvidia's stock price has recently been adjusted, making it an investment opportunity for long-term investors.
Google's quantum computing breakthrough highlights rapid technological advancements and will also benefit Nvidia's dominant position in the AI GPU market.
NVDA's free cash flow could reach $100 billion per year in 2025 and could provide significant benefits to shareholders through dividends and share buybacks.
The chip design company is expected to achieve double-digit annual EPS growth in the near future, and there is a possibility that it will greatly benefit from the increase in AI factories.
The company's strong product roadmap and innovation potential make it an attractive long-term investment.
Google's quantum computing breakthrough highlights rapid technological advancements and will also benefit Nvidia's dominant position in the AI GPU market.
NVDA's free cash flow could reach $100 billion per year in 2025 and could provide significant benefits to shareholders through dividends and share buybacks.
The chip design company is expected to achieve double-digit annual EPS growth in the near future, and there is a possibility that it will greatly benefit from the increase in AI factories.
The company's strong product roadmap and innovation potential make it an attractive long-term investment.
Nvidia (NASDAQ: NVDA The stock price of) has recently been adjusted as enthusiasm for semiconductor companies has faded, and the market has declined in response to comments on federal fund interest rates by the Federal Reserve (Fed) last week. However, Nvidia has begun expanding Blackwell GPUs, and in my opinion, it could be the top investment destination for 2025. Furthermore, Alphabet ( GOOG ) announced a quantum computing breakthrough with Willow chips, which promises significant technological enhancements to the chip industry as a whole, including the data center market. Since Nvidia's stock price is firmly anchored in a long-term upward trend that is likely to continue for years to come, I think this adjustment is a unique buying opportunity.
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Last Assessment
In response to the fact that Nvidia, a semiconductor company, reported earnings for the third quarter and announced a fairly bullish outlook for the fourth quarter, I evaluated the company's stock as a strong buy. Nvidia :It's grossly underrated. My bullish sentiment was largely influenced by high expectations for the launch of Nvidia's Blackwell GPUs and the fact that Nvidia has strong execution power. Additionally, Nvidia announced a $50 billion share buyback, which supports the company's stock price. Google's recent major advancements in quantum computing will also accelerate the market for accelerated computing, which could clearly benefit Nvidia.
Blackwell GPUs, quantum computing breakthroughs, and Rubin's release
Google recently made news due to its major achievements in quantum computing, highlighting the accelerated improvement in the processing power of computer chips. According to Google、The company's quantum computer chip called Willow seems to have succeeded in solving math problems that other supercomputers take 10 trillion years to solve.
This achievement is truly unprecedented and highlights just how fast technological progress is today. Due to advances in computer processing technology, the industry is probably on the brink of transformation in the GPU market, which is NVIDIA's flagship product. This semiconductor company dominates the industry with a market share of over 90% and is benefiting greatly from the rapid increase in demand for AI GPUs. Most importantly, like Google, NVIDIA sees significant growth opportunities in accelerated computing. For example, NVIDIA predicts GPU performance will grow exponentially 1,000x within 10 years, creating significant upgrade opportunities for NVIDIA and its large data center customers.
NVIDIA
There are three reasons why Nvidia is likely to benefit from significant productivity improvements.
The upgrade and refresh cycles will be drastically shortened, and the company will be able to increase GPU shipments much faster than before. Both Nvidia and AMD have already announced that they will shift to a yearly product release cycle so that customers can benefit from the latest technological achievements.
As more AI-enabled chips are released in a shorter period of time in the future, the upgrade cycle will be shortened, which could have a positive impact on average sales prices. There is currently a shortage of AI-optimized GPUs in the market, so the price trend is likely to be very favorable to GPU designers and manufacturers.
As designing and manufacturing new CPUs and GPUs become increasingly complex and capital intensive, established chip design firms like Nvidia will have a competitive advantage, which could lead to increased market share. Nvidia has developed chips with significant performance improvements and drastically reduced power consumption compared to previous generation models, such as the H100 and Blackwell, and has a track record of rapidly launching these products. Businesses that can efficiently handle short upgrade cycles can benefit from shorter lead times.
Advancing GPU-accelerated computingAI factories will significantly increase demand for data centers and create a $1 trillion market opportunity, Nvidia said. Nvidia has GPU market opportunities with the advent of AI factories2 trillion dollarsIt is stated that it is expected to increase to
Nvidia will continue to expand Blackwell in 2025,Chip platform Rubin in 2026It is planned to expand. As a result, the company's sales and operating profit are expected to continue to increase. In fact, Nvidia generated a huge operating profit of 61.3 billion dollars during the first 9 months of the current fiscal year (fiscal year 2025), showing a 16-fold increase compared to the entire 2020 fiscal year. At current run rates, Nvidia is likely to expect gross profit of $82 billion for the full year of fiscal year 2025, which reflects a total increase of 22 times compared to fiscal year 2020.
As for next year, I continue to believe that Nvidia has the potential to significantly increase sales and operating profit, mainly due to the accelerated growth of machine learning and Gen-AI models. At current growth rates, it's quite possible for Nvidia to generate over $100 billion in both operating profit and free cash flow next year.
NVIDIA
Nvidia's free cash flow is expected to reach 100 billion dollars per year in 2025
Since profits, and most importantly free cash flow, can be distributed to shareholders as dividends and share buybacks, FCF is an important indicator worth paying attention to. In the third quarter of 2025, Nvidia generated $16.8 billion in free cash flow in one quarter. This means that on a run rate basis, Nvidia is expected to achieve at least $67 billion in free cash flow over the next 12 months. Nvidia's free cash flow increased 138% year over year in the third quarter due to increased sales of GPU products. Also, if Nvidia's Blackwell shipments increase steadily, there is a possibility that this increase will accelerate.
However, Nvidia's free cash flow is likely to increase significantly in the future, and the semiconductor company could easily exceed the FCF threshold of 100 billion dollars per year in 2025. I expect Nvidia's free cash flow to increase 55 to 65 percent year over year in 2025. Based on this estimate, Nvidia is likely on track to achieve free cash flow in the range of $101 billion to $107 billion. As a result, Nvidia has established a firm position as one of the technology companies with the strongest free cash flow in the world (FCF per quarter is approximately 25 billion dollars), and Google, Apple ( AAPL), Microsoft ( MSFT It is equivalent to).
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NVIDIA Ratings
The conclusion I reached in my previous research on semiconductor companies is that Nvidia is grossly undervalued when considering the long-term potential in the AI GPU market. The reason I have an optimistic outlook on Nvidia relates to Nvidia's overwhelming market position in the data center market and the rise of AI factories which are expected to significantly boost demand for AI GPUs. Currently, Nvidia's stock price-earnings ratio based on earnings forecasts for next year is 30.4 times, and Advanced Micro Devices ( AMD It is 23.4 times higher than).
AMD's valuation has also recently declined, but the company has reported strong performance in the third quarter, and is in the early stages of a significant increase in production of the MI300X accelerator. AMD iswhereinAs explained, there is also a possibility that it will benefit from Nvidia's Blackwell shortage.
In my previous research on NVIDIA, I calculated that if EPS could grow at an average annual rate of 25% over the next 5 years, NVIDIA's proper value would be between $315 and $350 per share. I continue to believe these estimates are very realistic and attainable, and I actually believe NVIDIA will be able to significantly exceed these estimates in the future, given the opportunities for accelerated computing, the increase in AI factories, and the associated expansion of the total target market.
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Nvidia risks
As the market relentlessly demands increased productivity through AI, I think it's nearly impossible for companies to resist aggressive spending on AI-optimized chips. Given its limited production capacity and speed of technology development, Nvidia will benefit from this growth due to faster product release cycles and an upward trend in average sales prices. My mind about Nvidia will change if the company's free cash flow growth slows down or demand for Blackwell or Rubin gradually weakens in 2026.
Lastly
Enthusiasm for Nvidia has faded in recent weeks, and last week in particular, but Nvidia has set the strongest product roadmap in the past few years, and Google's leap forward in terms of quantum processing capabilities suggests the possibility of major innovation in the GPU market as well. Nvidia plans to release Rubin, which is the next generation GPU, in 2026, and there is a possibility that it will be a major beneficiary of accelerated technological advances in GPU technology.
Recently, Nvidia's stock price has declined, and I believe this will be an investment opportunity for long-term investors. Nvidia is expected to grow over several years in the accelerated computing market through top-of-the-line GPU products, and the chip company is expected to continue growing EPS by double digits every year for the foreseeable future. The risk profile is very appealing, and considering its core business catalysts, I think Nvidia has the potential to be a top performer in 2025.
yChartsdata by
Last Assessment
In response to the fact that Nvidia, a semiconductor company, reported earnings for the third quarter and announced a fairly bullish outlook for the fourth quarter, I evaluated the company's stock as a strong buy. Nvidia :It's grossly underrated. My bullish sentiment was largely influenced by high expectations for the launch of Nvidia's Blackwell GPUs and the fact that Nvidia has strong execution power. Additionally, Nvidia announced a $50 billion share buyback, which supports the company's stock price. Google's recent major advancements in quantum computing will also accelerate the market for accelerated computing, which could clearly benefit Nvidia.
Blackwell GPUs, quantum computing breakthroughs, and Rubin's release
Google recently made news due to its major achievements in quantum computing, highlighting the accelerated improvement in the processing power of computer chips. According to Google、The company's quantum computer chip called Willow seems to have succeeded in solving math problems that other supercomputers take 10 trillion years to solve.
This achievement is truly unprecedented and highlights just how fast technological progress is today. Due to advances in computer processing technology, the industry is probably on the brink of transformation in the GPU market, which is NVIDIA's flagship product. This semiconductor company dominates the industry with a market share of over 90% and is benefiting greatly from the rapid increase in demand for AI GPUs. Most importantly, like Google, NVIDIA sees significant growth opportunities in accelerated computing. For example, NVIDIA predicts GPU performance will grow exponentially 1,000x within 10 years, creating significant upgrade opportunities for NVIDIA and its large data center customers.
NVIDIA
There are three reasons why Nvidia is likely to benefit from significant productivity improvements.
The upgrade and refresh cycles will be drastically shortened, and the company will be able to increase GPU shipments much faster than before. Both Nvidia and AMD have already announced that they will shift to a yearly product release cycle so that customers can benefit from the latest technological achievements.
As more AI-enabled chips are released in a shorter period of time in the future, the upgrade cycle will be shortened, which could have a positive impact on average sales prices. There is currently a shortage of AI-optimized GPUs in the market, so the price trend is likely to be very favorable to GPU designers and manufacturers.
As designing and manufacturing new CPUs and GPUs become increasingly complex and capital intensive, established chip design firms like Nvidia will have a competitive advantage, which could lead to increased market share. Nvidia has developed chips with significant performance improvements and drastically reduced power consumption compared to previous generation models, such as the H100 and Blackwell, and has a track record of rapidly launching these products. Businesses that can efficiently handle short upgrade cycles can benefit from shorter lead times.
Advancing GPU-accelerated computingAI factories will significantly increase demand for data centers and create a $1 trillion market opportunity, Nvidia said. Nvidia has GPU market opportunities with the advent of AI factories2 trillion dollarsIt is stated that it is expected to increase to
Nvidia will continue to expand Blackwell in 2025,Chip platform Rubin in 2026It is planned to expand. As a result, the company's sales and operating profit are expected to continue to increase. In fact, Nvidia generated a huge operating profit of 61.3 billion dollars during the first 9 months of the current fiscal year (fiscal year 2025), showing a 16-fold increase compared to the entire 2020 fiscal year. At current run rates, Nvidia is likely to expect gross profit of $82 billion for the full year of fiscal year 2025, which reflects a total increase of 22 times compared to fiscal year 2020.
As for next year, I continue to believe that Nvidia has the potential to significantly increase sales and operating profit, mainly due to the accelerated growth of machine learning and Gen-AI models. At current growth rates, it's quite possible for Nvidia to generate over $100 billion in both operating profit and free cash flow next year.
NVIDIA
Nvidia's free cash flow is expected to reach 100 billion dollars per year in 2025
Since profits, and most importantly free cash flow, can be distributed to shareholders as dividends and share buybacks, FCF is an important indicator worth paying attention to. In the third quarter of 2025, Nvidia generated $16.8 billion in free cash flow in one quarter. This means that on a run rate basis, Nvidia is expected to achieve at least $67 billion in free cash flow over the next 12 months. Nvidia's free cash flow increased 138% year over year in the third quarter due to increased sales of GPU products. Also, if Nvidia's Blackwell shipments increase steadily, there is a possibility that this increase will accelerate.
However, Nvidia's free cash flow is likely to increase significantly in the future, and the semiconductor company could easily exceed the FCF threshold of 100 billion dollars per year in 2025. I expect Nvidia's free cash flow to increase 55 to 65 percent year over year in 2025. Based on this estimate, Nvidia is likely on track to achieve free cash flow in the range of $101 billion to $107 billion. As a result, Nvidia has established a firm position as one of the technology companies with the strongest free cash flow in the world (FCF per quarter is approximately 25 billion dollars), and Google, Apple ( AAPL), Microsoft ( MSFT It is equivalent to).
yChartsdata by
NVIDIA Ratings
The conclusion I reached in my previous research on semiconductor companies is that Nvidia is grossly undervalued when considering the long-term potential in the AI GPU market. The reason I have an optimistic outlook on Nvidia relates to Nvidia's overwhelming market position in the data center market and the rise of AI factories which are expected to significantly boost demand for AI GPUs. Currently, Nvidia's stock price-earnings ratio based on earnings forecasts for next year is 30.4 times, and Advanced Micro Devices ( AMD It is 23.4 times higher than).
AMD's valuation has also recently declined, but the company has reported strong performance in the third quarter, and is in the early stages of a significant increase in production of the MI300X accelerator. AMD iswhereinAs explained, there is also a possibility that it will benefit from Nvidia's Blackwell shortage.
In my previous research on NVIDIA, I calculated that if EPS could grow at an average annual rate of 25% over the next 5 years, NVIDIA's proper value would be between $315 and $350 per share. I continue to believe these estimates are very realistic and attainable, and I actually believe NVIDIA will be able to significantly exceed these estimates in the future, given the opportunities for accelerated computing, the increase in AI factories, and the associated expansion of the total target market.
yChartsdata by
Nvidia risks
As the market relentlessly demands increased productivity through AI, I think it's nearly impossible for companies to resist aggressive spending on AI-optimized chips. Given its limited production capacity and speed of technology development, Nvidia will benefit from this growth due to faster product release cycles and an upward trend in average sales prices. My mind about Nvidia will change if the company's free cash flow growth slows down or demand for Blackwell or Rubin gradually weakens in 2026.
Lastly
Enthusiasm for Nvidia has faded in recent weeks, and last week in particular, but Nvidia has set the strongest product roadmap in the past few years, and Google's leap forward in terms of quantum processing capabilities suggests the possibility of major innovation in the GPU market as well. Nvidia plans to release Rubin, which is the next generation GPU, in 2026, and there is a possibility that it will be a major beneficiary of accelerated technological advances in GPU technology.
Recently, Nvidia's stock price has declined, and I believe this will be an investment opportunity for long-term investors. Nvidia is expected to grow over several years in the accelerated computing market through top-of-the-line GPU products, and the chip company is expected to continue growing EPS by double digits every year for the foreseeable future. The risk profile is very appealing, and considering its core business catalysts, I think Nvidia has the potential to be a top performer in 2025.
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