š Nvidia Stock Deep Dive: āThe Godfather of AI Chipsā Powers Higher š
- NexxtGen Markets
- 2 days ago
- 4 min read
Ticker:Ā Nvidia (NVDA)
Sector:Ā Semiconductors / AI Infrastructure
Market Cap:Ā $2.3 trillion+
YTD Performance (as of May 2025):Ā +77%
PE Ratio (TTM):Ā 74x
Dividend Yield:Ā 0.02%
Founder/CEO:Ā Jensen Huang
š§ A tech titan reshaped by the AI revolution
Nvidiaās transformation from a graphics chipmaker into the heartbeat of the artificial intelligence revolution is nothing short of extraordinary. Once best known for powering gaming rigs and high-performance computing, Nvidia (NVDA)Ā is now the primary enabler of global AI infrastructure ā powering data centres, autonomous vehicles, language models, robotics, and edge computing.
With its cutting-edge GPUs, particularly the H100 and upcoming Blackwell architecture, Nvidia has cemented itself as the dominant force behind AI training and inference. It is not just selling hardware ā it is building an ecosystem, complete with CUDA software, NVLink interconnects, and enterprise AI stacks.
š° Q1 2025 earnings ā another blowout quarter
Nvidia once again exceeded lofty expectations in its latest earnings:
Metric | Q1 2025 | Year-on-Year |
Revenue | $26.0 billion | +262% |
Data Centre Revenue | $22.6 billion | +427% |
Net Income | $14.9 billion | +628% |
EPS (GAAP) | $5.91 | +645% |
Gross Margin | 78.4% | +12.8pp |
Data Centre revenue now represents nearly 87% of the business. This shift reflects not only exponential AI demand but also Nvidia's unique pricing power in a supply-constrained environment.
Gross margins have exploded higher, nearing 80%, as customers race to buy its AI accelerators at premium prices. Nvidiaās foundry partners, particularly TSMC, are scaling production to meet demand, but Jensen Huang has warned that ādemand still far exceeds supply.ā
š® Blackwell chips are coming ā the next super cycle?
The next catalyst? Nvidiaās BlackwellĀ architecture ā set to replace the current H100 generation ā is expected to start shipping in the second half of 2025. With enhanced performance, energy efficiency, and faster memory throughput, Blackwell chips will power the next wave of GenAI models and high-performance workloads.
Major cloud hyperscalers ā including Microsoft Azure, Google Cloud, Amazon AWS, Oracle, and Meta ā have already committed to deploying Blackwell-based infrastructure. These partnerships will likely accelerate Nvidiaās already astronomical data centre growth.
At the same time, Nvidia is working on integrating Grace CPUĀ and Grace Hopper SuperchipsĀ for AI inference at the edge, competing directly with x86 incumbents like Intel and AMD in the server CPU market.
š Global expansion ā AI demand surges across borders
Nvidiaās global footprint continues to widen, with AI infrastructure spending now accelerating across:
Saudi ArabiaĀ and the UAE, which are investing billions into domestic LLMs, data centres, and sovereign AI capabilities using Nvidia chips.
Europe, where Nvidia recently announced plans for AI research hubs and partnerships with major carmakers in the autonomous driving space.
Asia-Pacific, as governments and enterprises embrace edge AI, robotics, and industrial automation.
Importantly, Nvidiaās software stack gives it lock-in advantages. CUDA remains the default programming model for AI workloads ā a moat that new entrants, including custom silicon players and sovereign chip initiatives, struggle to replicate.
š Valuation ā expensive, but maybe deserved?
Letās not sugar-coat it: Nvidia trades at lofty multiples.
Metric | Value |
Forward PE | ~38x |
Price/Sales | ~25x |
PEG Ratio | 1.6 |
EV/EBITDA | ~30x |
But with revenue growing at triple-digit rates, margins expanding, and cash flow surging, the question is: how long can Nvidia defy gravity?
The bullish thesis is that Nvidia is not just a chip company ā it is the picks-and-shovels providerĀ for the AI gold rush. Just as AWS became indispensable to the cloud era, Nvidia is doing the same for AI.
However, any slowdown in hyperscaler capex, regulatory roadblocks, or a sharp increase in competitive pressure (e.g., from AMDās MI300X or Googleās TPU offerings) could bring volatility.
š§ Risks to consider
While Nvidia's moat is strong, investors should keep a close eye on:
Geopolitical exposure: The US-China chip restrictions continue to evolve, and Nvidia is already producing H20 and other export-compliant chips for Chinese customers.
Customer concentration: A large portion of Nvidiaās Data Centre revenue comes from just a few major cloud providers.
Valuation risk: Any hiccup in earnings, supply constraints, or AI adoption trends could lead to sharp corrections.
Supply chain: Heavily reliant on TSMC and other third-party foundries; any disruption could ripple through earnings.
š Long-term outlook ā still early innings for AI
Despite its near-term meteoric rise, many argue weāre still in the early stages of the AI build-out. Enterprise adoption is just beginning. Government spending is rising. Entire sectors ā from healthcare to defence, finance to entertainment ā are experimenting with generative AI and automation.
Nvidiaās continued dominance in training chips, and its push into inference, CPUs, networking, and even AI software orchestration, gives it multiple levers for growth.
In the long run, Jensen Huangās vision of an āAI-powered economyā puts Nvidia at the centre of one of the largest technological revolutions since the internet.
š NexxtGen Takeaway
Nvidia remains the undisputed heavyweight of the AI arms race ā a company whose products have become synonymous with the infrastructure of tomorrow. While the stock isnāt cheap, its position in the global tech stack is arguably unrivalled.
For long-term investors bullish on AI, automation, and data-driven innovation, Nvidia (NVDA)Ā could still be just getting started.
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