Over the last five years, NVDA stock is up by more than 1,800%, and that’s an undeniably great performance. It’s known that Nvidia (NASDAQ: NVDA) soared so much because almost every single company on the planet right now is investing heavily in AI, which means that they need advanced chips to support AI technologies, and Nvidia is the leader in the AI chip market, so it’s been enjoying a great rally thanks to the AI boom.
Many analysts think that the tech and AI boom will continue, but some of them also think that NVDA stock has capitalized on this AI trend and peaked, so the price should fall and the valuation should normalize. On the other hand, many people have made a lot of money by investing in Nvidia. In fact, if you invested in the company a year ago, you would’ve gotten a 203% gain on your original investment. Here’s why Nvidia still has room to grow.
Nvidia in the Healthcare Industry
Many consider Nvidia a great business because it continues to innovate and enter more industries, and while there’s competition from other companies, Nvidia is still the market leader when it comes to AI chips and the competition is always one step behind, if not more. Last month, Nvidia shared a blog post talking about its medical devices and how it’s transforming the healthcare hardware market with its AI solutions.
Nvidia also said that the future of healthcare is software-defined and AI-enabled, and that around 700 FDA-cleared, AI-enabled medical devices are now on the market, which is more than 10x the number available in 2020. It also mentioned examples of leading medtech companies, like GE Healthcare (NASDAQ: GEHC), which are using Nvidia technology to develop, fine-tune and deploy AI for software-defined medical imaging applications. Nvidia sees a large opportunity in the healthcare sector, according to the company’s Vice President of Healthcare, Kimberly Powell. She said that the company sees an opportunity in developing surgical robots, and also in using AI in accelerated drug discovery.
Besides this, Nvidia announced that it teamed up with Hippocratic AI, a healthcare and AI company, and unveiled a new category of AI-powered healthcare agents. These agents are basically AI nurses, which are responsible for following up with patients after their doctor appointments. For example, these AI nurses can perform tasks like calling a patient after they get discharged from the hospital, talking to them, and following up on their diet and any medications they should be taking. Not only that, but they can give the patients any instructions from their doctors, and answer any question they have regarding their condition.
According to the companies, there are more than 40 healthcare providers currently testing this technology, and it’s set to revolutionize the way healthcare providers operate, offering an innovative solution to the current nursing shortage in the country. The services of Nvidia’s AI healthcare agents cost $9 per hour, a stark contrast to the $90 hourly wage of human nurses. Despite this, Hippocratic AI said that this cost-efficiency doesn’t compromise the quality of care, and added that its AI nurses can match or even exceed human nurses in areas such as bedside manner and patient education.
In 2021, the total revenue in the U.S. healthcare market was an astonishing $4.3 trillion. Therefore, this is a massive market that Nvidia can tap into with new technologies, and as AI technologies gets better, which will very likely happen since every company seems to agree on AI being the future, more of these companies will be using Nvidia Solutions one way or another, whether it’s Nvidia’s hardware, software, AI solutions, or infrastructure solutions.
Nvidia in the Auto Industry
Long-time Nvidia investors already know of Nvidia’s Drive Thor, the chip Nvidia makes for automakers, which basically becomes the brain of the car. Nvidia teamed up with Chinese automakers like BYD (OTCMKTS: BYDDF) and Li Auto (NASDAQ: LI) to provide them with these solutions, and now it’s seeking to integrate the new Blackwell GPU architecture that it revealed in GTC 2024 into Nvidia Drive Thor, which will make the chip really strong and allow it to handle large AI solutions that will help with autonomous driving.
Notably, BYD is also using Nvidia AI for training self-driving cars, and it also uses the Nvidia Omniverse platform to plan its factories. The automotive industry is massive, so this is a great opportunity for Nvidia. Aside from BYD and Li Auto, Nvidia is also offering its AI automotive solutions to western companies like Lucid (NASDAQ: LCID), Volvo (OTCMKTS: VLVLY), and Mercedes-Benz (OTCMKTS: MBGAF), but we have to wait until upcoming releases from these companies to see if the new Nvidia-backed vehicles are good enough to compete with Tesla (NASDAQ: TSLA) and its FSD software.
NVDA Stock Forecast
While all analysts would agree that Nvidia is the AI chips market leader, not all agree on its current valuation, and since its stock had an amazing run for a really long time now, many are wondering if it’s possible for this to continue, and think that Nvidia has peaked and now it’s time to sell and take in profits. But there’s still some logic to buying NVDA stock now. The company has a lot going on and expects to implement a lot of new technologies in the future.
Let’s take a look at where Nvidia will be in 2025, and to determine that, we have to look at the company’s next year earnings per share estimate. Wall Street analysts think Nvidia is going to deliver $30.94 in earnings per share next year, and this estimate Back to the Wall Street for 2026 has actually been upgraded multiple times in the last 90 days by the analysts, from $23.76 to $24 to $24.70.
Then, there was a big jump to $29.87 and then another jump to $30.24 before it reached $30.94. These numbers have increased by a lot over a short period of time, so the outlook for NVDA stock price should change as well. NVDA stock trades at around $877.35, a 203% increase from the previous year, and its PE ratio is 73.54, according to YCharts. Therefore, if Nvidia’s 2025 EPS comes in at $30.94 like Wall Street analysts estimate, and the PE ratio stays at 73.54, then the stock price could end up at $2,275 in 2025.
That’s probably considered the best case scenario, as Nvidia’s PE ratio could decrease, but even if it went down to 40, for example, NVDA stock price would be at approximately $1,237, which is still a 41% upside from where it’s trading now. But investing in Nvidia isn’t without risk, as many expect the AI hype to definitely slow down sometime in the future. Still, even when that happens, AI will still grow, just not as fast and as much as it’s currently growing now. In turn, this will reflect in Nvidia’s valuation as the AI chips market leader.
Disclaimer
Please visit and read our disclaimer here.
