Could Nvidia's 2025 Be as Good as Its 2024?

Nvidia (NASDAQ: NVDA) had another banner year in the market, with its stock rising around 185% so far this year. This comes after 2023's impressive 239% run, so the obvious question is: Can Nvidia do it again in 2025?

Nvidia would have to clear many hurdles in order to do it, as another repeat performance of 2023 and 2024 would require unbelievable continued growth.

GPU demand has risen continually over the past two years

Nvidia's recent success is directly tied to the proliferation of artificial intelligence (AI). Its graphics processing units (GPUs) are the backbone of this movement, providing users with the computing power they need to train AI models. Thousands of GPUs can be connected in clusters to make the machines even more powerful. This benefits Nvidia significantly, as clients aren't just buying one or two -- they're buying thousands.

This caused Nvidia's revenue to boom in the past few quarters, repeatedly setting record-high revenue numbers.

NVDA Revenue (Quarterly) data by YCharts.

If Nvidia meets management's revenue guidance for third-quarter fiscal year 2025 (ending around Oct. 31), it will notch another all-time high, with $32.5 billion in revenue expected.

This performance has been incredible, but growth is slowing. Once you've reached the size of Nvidia, it's nearly impossible to triple revenue year over year; there just isn't enough money to do it. We're starting to see this deceleration happen, although Nvidia is still growing very quickly.

NVDA Operating Revenue (Quarterly YoY Growth) data by YCharts.

If Nvidia hits management's Q3 revenue goals, its revenue growth will fall to 80% year-over-year growth. That's still impressive growth, but it is slower than what it has put up, which hurts Nvidia's chance of posting a repeat.

For the 2026 fiscal year (ending January 2026), Wall Street analysts expect 43% year-over-year revenue growth, which is very impressive considering Nvidia's size, but likely not enough for the stock to triple.

There are valuation considerations as well.

Nvidia has a premium valuation attached to its stock

Nvidia has a premium valuation due to unbelievable product demand and top-tier execution in fulfilling it. As a result, its valuation has reached a high price tag.

NVDA PE Ratio data by YCharts.

At 65 times trailing earnings, Nvidia isn't a cheap stock. But it's also wise to consider 2025's metrics since it is growing so fast. When you use 2025's earnings projections (FY 2026 for Nvidia), the price tag falls to 34 times forward earnings.

That means if Nvidia hits all of Wall Street's estimates and the stock price stays the same, it will trade at 34 times trailing earnings once it reports fourth-quarter FY 2026 results. Considering that's the high end of what many tech stocks are trading at now, it shows just how expensive Nvidia's stock has become.

So, what's a realistic one-year return for Nvidia's stock? I don't know. It's impossible to tell what market sentiment will be and what Nvidia's growth will actually look like. You could use Wall Street analysts' average one-year price target of $154 (indicating 11.5% upside), but that also has a lot of guesswork in it.

As long-term investors, we're better off considering the overall picture and making our decisions based on that information. We know that AI demand is just in its early innings, and Nvidia's GPUs are the backbone of this movement. With that in mind, it's clear that demand for its products will last past 2025. However, the stock is priced at a point where it must execute to perfection in order to deliver any returns.

Nvidia's stock won't triple in 2025, so it won't have quite the same year as 2024. It would be worth nearly $10 trillion in market cap if it posted a 2024 repeat. However, if AI demand remains strong, I think the stock will put up another market-beating year. Just don't expect it to be unbelievable returns.

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.