Since 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 is working Arm supports to develop a chip that is as AI-capable as any Nvidia technology, for example. But every time a competitor takes Nvidia’s lead in 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 most demanding generative or inference AI workloads.

And the second critical reality that investors need to consider? As much as Nvidia’s stock is priced right now, that’s not at all unusual for this ticker. Nvidia’s trailing 12-month price-to-earnings ratio has averaged above 80 over the past five years.

The analyst community is not deterred either. The vast majority of analysts still consider Nvidia stock a strong buy despite its strong valuation, giving the stock a consensus price target of $174.60, or 25% above its current price.

None of this inherently means that Nvidia will be the best-performing stock on the market in 2025, even among the so-called “Magnificent Seven” companies that already have massive market caps.

But by providing the foundation for AI technology that is still in high demand, and likely to continue to be in high demand for years to come, Nvidia is well positioned to remain one of the largest companies in the market

However, this is not the main reason why you would want to own a part of the company. The bull case here remains rooted in Nvidia’s strong upside and downside growth prospects.

Before you buy shares in Nvidia, consider this:

The Motley Fool Stock Advisor The team of analysts has just identified what they think they are 10 best stocks because investors are buying now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $832,928!*

Stock advisor offers investors an easy-to-follow plan for success, including guidance on building a portfolio, regular analyst updates, and two new stock picks every month. The Stock advisor service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 actions »

* Stock Advisor returns from January 6, 2025

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Apple, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has one disclosure policy.

Nvidia became one of the largest companies by market cap in 2024. Will its reign continue in 2025? was originally published by The Motley Fool