Nvidia’s Future: Will AI Demand Propel Stock Soaring Again?

SAN FRANCISCO, Calif. — Nvidia, a leader in AI chip design, saw its stock hit a record high nearly $150 in January but has since declined by 16% due to emerging competition from China’s DeepSeek, an AI startup that reportedly trained advanced models at a fraction of the cost compared to Nvidia’s offerings. Investor concern peaked when it became apparent that DeepSeek’s methodology could impact demand for Nvidia’s high-powered graphics processing units (GPUs), crucial for AI development.

However, Nvidia CEO Jensen Huang‘s recent remarks may provide a silver lining for the company’s stock, which is currently priced at $116.39 as of March 5, 2025. Huang indicated that the new generation of AI models could lead to a significant uptick in GPU demand, potentially counteracting fears stemming from DeepSeek’s emerging technologies.

In the company’s recent fiscal report for 2025, Nvidia announced total revenue of $130.5 billion, marking a 114% increase from the previous year, exceeding management’s forecast of $128.6 billion. Notably, the data center segment, which plays a major role in its earnings, generated $115.1 billion, up 142% from last year.

One key product contributing to this momentum is Nvidia’s new Blackwell architecture, which launched in the fourth quarter of fiscal 2025 and recorded $11 billion in sales. This new GPU line is purported to perform at speeds 30 times greater than its predecessor, the H100, revolutionizing inference speeds and overall application efficiency.

The implementation of reasoning models in AI could increase computational demands dramatically, according to Huang’s comments on an investor call. He noted that such models could require up to 100 times more compute compared to earlier systems. This trend could become a significant factor for Nvidia’s business model, as it pivots towards meeting burgeoning demands for inference workloads.

Despite initial fears about DeepSeek’s capabilities, major clients, including tech giants, remain committed to leveraging Nvidia’s GPUs for their AI infrastructures. For example, Meta Platforms recently announced a projected $65 billion investment in infrastructure, citing the necessity of powerful computing tools for their operations. Huang emphasized the extraordinary demand for Nvidia’s Blackwell, reinforcing the company’s leading role in the evolving AI landscape.

Accordingly, financial analysts suggest Nvidia’s stock remains a strong buy despite recent fluctuations. The stock currently trades with a price-to-earnings (P/E) ratio of 42.5, which analysts point out is still below its historical average of 59.3. Wall Street consensus anticipates a projected earnings-per-share (EPS) of $4.49 for the upcoming fiscal year, leading to a potential 53% increase in stock value over the next year to maintain its current P/E ratio.

Given the substantial investments in AI technology and the increasing reliance on more complex models that require Nvidia’s advanced computing capabilities, there is potential for significant stock recovery and growth. Huang’s comments could serve as the catalyst for renewed investor confidence and, potentially, a resurgence in Nvidia’s stock price.

As the landscape of artificial intelligence continues to evolve, Nvidia’s innovations and existing market position are setting the stage for sustained growth.