In theory, company size shouldn’t matter. A stock’s potential return on any amount of capital invested in it should be an investor’s primary concern.
In reality, however, the biggest market companies are often the most rewarding market cards. That’s how they became the biggest names. That was certainly the case with Nvidia(NASDAQ: NVDA). It was already a $360 billion company at the end of 2022, but two years of triple-digit gains they turned him into a titan worth $3.4 trillion.
The question is, can the stock repeat that feat in 2025?
It is not currently the largest company on the stock exchange – it deserves that honor Apple once again, which as of this writing is worth $3.7 trillion. But Nvidia currently ranks second, according to The Motley Fool’s internal researchand Microsoft is in third place with a market capitalization of about 3.2 trillion dollars.
Regardless, the size of a company is not nearly as important to an investor as the potential growth of its stock. So where does Nvidia stand in this regard?
The basis of its recent supremacy and perspective is artificial intelligence (AI). Although the tech giant makes graphics cards for games, illustration and design work, and automotive and robotics applications, its biggest business right now is data center AI. This segment now consistently accounts for more than 80% of the company’s overall revenue line, with data center sales in the most recent quarter (3QFY25) up more than 100% year-over-year to $30.8 billion.
That’s hard to follow, and mathematically speaking, that kind of triple-digit growth probably won’t continue much longer. Although the analyst community is calling for 112% revenue growth for Nvidia’s fiscal year 2025, it expects revenue growth of 52% next year.
Data source: StockAnalysis.com. Chart by author.
That’s certainly still rapid growth, backed by earnings growth that can be just as rapid. With the stock already trading at more than 50 times trailing earnings per share and more than 30 times fiscal 2026 estimates, potential stock buyers may balk at the frothy valuation.
The thing is, those hesitant investors may be looking beyond a few important — and optimistic — realities.
First, the AI revolution is still far from over. It is probably still in its earliest stages. For hardware providers like Nvidia, market research division Mordor Intelligence puts the industry’s potential growth into perspective, calling for average annual AI hardware revenue growth of 26% through 2030, in line with expectations from Precedence Research. Market.Us puts the number closer to 32% by 2033.
Given that Nvidia supplies the vast majority of processors used by AI data center owners and operators, it stands to gain the most from this continued market growth.
Competition is coming for sure. Apple cooperates with Arm Holdings to develop a chip as capable of AI as any Nvidia technology, for example. But for every blow a competitor takes to Nvidia’s dominance of the AI hardware market, the company seems to counter with something even better. As an example, Nvidia’s recently introduced NIM microservices enable seemingly ordinary desktop computers to function as personal supercomputers capable of handling even the toughest inference or generative AI workloads.
And what other critical reality do investors need to consider? As high as Nvidia’s stock prices are at the moment, that’s nothing out of the ordinary for this label. Nvidia’s trailing 12-month price-to-earnings ratio has averaged above 80 over the past five years.
The analyst community is also not discouraged. The vast majority of analysts still consider Nvidia stock a strong buy despite its high valuation, giving the stock a price target of $174.60, or 25% above its current price.
None of this inherently means that Nvidia will be the most successful stock on the market in 2025, even among the so-called “magnificent seven” companies that already boast huge market capitalizations.
But by providing the foundation for an AI technology that’s still in high demand — and likely to remain in high demand for years to come — Nvidia is well positioned to remain one of the biggest companies on the market.
However, this is not the main reason you want to own part of the company. The bull case here remains rooted in Nvidia’s strong top- and bottom-line growth prospects.
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James Brumley has no position in any of the listed stocks. The Motley Fool has positions and recommends Apple, Microsoft and Nvidia. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.
