Investing

Nvidia Price Prediction: Wall Street Expects a 20% Gain This Year

Rich Duprey

Published: January 16, 2025 8:43 am

Since ChatGPT was introduced in late 2022, artificial intelligence has driven Nvidia (NASDAQ:NVDA) forward to 900% gains. It is now the second most valuable stock with a $3.34 trillion market capitalization.

It’s off to a slow start in 2025, however, up just 1.5%. While no company can maintain such meteoric gains indefinitely, with AI still in its infancy, but rapidly scaling up, the likelihood NVDA stock can eventually surpass Apple (NASDAQ:AAPL) as the world’s biggest company seems high.

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On the surface, Wall Street seems a little less breathless about the AI chipmaker stock, at least for the immediate future. The consensus one-year price target analysts have set sits at $164 per share, a 20% increase over where NVDA currently trades. Still, that implies a $4 trillion valuation.

With Apple down 5% so far this year, my prediction that Nvidia will overtake the consumer tech giant in mere months looks on track. Let’s see, though, whether Wall Street’s forecast for Nvidia is on target, or underestimates the chipmaker’s potential.

An old problem resurfaces

Earlier this week, HSBC analyst Frank Lee cut his price target on Nvidia from $195 per share to $185, a 5% retrenchment, though he maintained a buy rating on the stock. It’s also 12.8% above the consensus view. He said the chipmaker faces first-half headwinds that will require Nvidia to show additional strength in the back half of the year.

Some of the biggest headwinds come from Nvidia’s newest Blackwell chip, which reportedly continues to have overheating issues. The AI accelerator’s debut was delayed last year because of similar issues, and though CEO Jensen Huang said the chipmaker had resolved them, a new report from industry site The Information suggests the problems remain.

Orders from Nvidia’s biggest customers, including Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), and Microsoft (NASDAQ:MSFT) — which each placed orders for $10 billion or more of the advanced AI chips — have apparently cut back some orders for Nvidia’s Blackwell GB200 racks, a framework in data centers that stores chips, cables, and other IT equipment.

Although many are waiting for Nvidia to work out the kinks, others including Microsoft, which ordered more than $50 billion worth of chips, are choosing to take some of Nvidia’s older Hopper chips instead.

Confronting a geopolitical storm

Other headwinds include new export rules the Biden administration imposed in the closing days of his presidency. The new restrictions continue to ban the export of AI technology not only to China, but extend them to Singapore, Israel, and Saudi Arabia. 

Nvidia had strenuously opposed the export ban. While 40% of its revenue comes from the U.S., another 30% is evenly split between China and Taiwan.

HSBC’s Lee lowered his estimate on the amount of revenue Nvidia will derive from its data center business, which houses its AI chips, to $236 billion from $253 billion. Instead of the 41,500 NVL 72 AI server racks previously expected to be sold, he thinks the chipmaker will only sell 35,000 of them. However, he still believes the chipmaker will exceed Wall Street’s full-year earnings estimates.

Lee said in a note, “But even on bear-case scenarios of only 20,000 to 25,000 NVL racks in (the coming fiscal year), our implied bear case for earnings per share of $4.84 to $5.14 remains 8% to 14% above consensus of $4.50.”

Key takeaway

The road forward for Nvidia is not as smooth as it has been over the past two years. As the complexity of the chips it develops grows, it is encountering issues with them. It also faces external pressures from geopolitical and macroeconomic events.

None of that is to say Nvidia isn’t still an AI chip powerhouse, and even those analysts foreseeing problems ahead are convinced it will overcome them and persevere. There seems a high likelihood that Nvidia will still become the first $4 trillion company.