Stock of the Week – NVIDIA (28.08.2025)

NVIDIA Today: A Global Technology Leader

NVIDIA is today not only the largest producer of graphics processors but also one of the key players in the global technology sector. For over two decades, the company has actively shaped the semiconductor market, focusing on the development of innovative GPUs that over time found applications not only in gaming and graphics but also in data centers and AI-based systems. Thanks to breakthrough technologies and advanced architecture, NVIDIA has built a position as a global leader with a growing influence on the development of modern technologies. The company’s current market capitalization exceeds $4 trillion, placing it among the elite group of the most valuable companies in the world alongside giants such as Apple, Microsoft, and Amazon.

NVIDIA’s Importance in Capital Markets

NVIDIA holds a crucial position in capital markets. It accounts for about 10% of the total market capitalization of the NASDAQ 100 index, which gathers the largest technology companies listed on the U.S. stock exchange, and nearly 8% of the S&P 500 index value, a broad indicator of the largest U.S. companies' health. Such a high share demonstrates the company’s extremely strong position, with its successes largely driving the growth of the entire tech industry and influencing global investment trends.

Global Leadership in GPUs and Computing Technologies

As a global leader in graphics processors and advanced computing technologies, NVIDIA continually sets new standards in the personal computer market, data centers, and AI and gaming solution sectors. The company, being a key player in the semiconductor industry, has gained recognition not only for the unparalleled computing power of its products but also for its innovative approach to software, ecosystems, and collaboration with business partners. NVIDIA shapes the future of technology through advanced AI algorithms used in autonomous vehicles, robotics, medicine, and a broad spectrum of industrial and scientific applications, making it a company of unique strategic importance in the era of digital transformation.

Comprehensive NVIDIA Product and Technology Portfolio

The company offers a wide range of products used in various fields, from entertainment and professional graphics to supercomputers powering AI and cloud computing.

• GeForce
  GeForce is the flagship line of graphics cards aimed at gamers and computer graphics enthusiasts. The RTX series, introduced in 2018, revolutionized the industry with the implementation of ray tracing technology, simulating realistic lighting effects, and DLSS (Deep Learning Super Sampling), which uses artificial intelligence to improve image quality without sacrificing performance. These innovations significantly raised visual standards in computer games, attracting millions of users worldwide. NVIDIA continually develops this line, introducing increasingly advanced models that offer better performance, energy efficiency, and new features.

• Professional RTX PRO GPUs
  NVIDIA’s RTX PRO series graphics cards are dedicated to professionals, digital creators, engineers, architects, and scientists. Leveraging the advanced computational capabilities of GPUs and AI technology, these products enable the execution of the most complex visualization projects, animations, simulations, and video processing. In industries such as film, automotive, medicine, and scientific research, these cards have become the foundation of modern work tools, allowing significant acceleration of processes and improvement in final output quality.

• Data Centers and AI – GPUs A100 and H100
  One of NVIDIA’s most important business segments is delivering solutions for data centers and the AI industry. The A100 and the latest H100 GPUs are powerful computing units dedicated to tasks such as machine learning, deep learning, data analysis, and high-performance computing (HPC). These products form the backbone of the IT infrastructure for the world’s largest tech companies, research institutions, and cloud service providers. Thanks to high scalability, flexibility, and energy efficiency, NVIDIA enables the creation and training of the most advanced AI models, including neural networks used in generative AI and image recognition.

• Software Ecosystem and Platforms
  NVIDIA’s success is not based solely on hardware. The company consistently develops its own programming platforms and tools that integrate hardware with software, allowing users to maximize GPU capabilities.

  • CUDA – the flagship programming platform that revolutionized parallel computing and became the industry standard, enabling developers to create efficient GPU-based applications.

  • TensorRT – specialized software for AI model optimization.

  • Omniverse – a platform for creators and engineers enabling real-time collaboration on virtual worlds, simulations, and 3D models. A key tool for industry, architecture, and manufacturing.

Second Quarter Results

Market analysts expected NVIDIA to achieve revenues around $46.23 billion, reflecting strong demand, especially in the data center segment. Earnings per share (EPS) were estimated at about $1.01, indicating stable profitability despite rising operating costs. Data Center segment revenues, a key growth area for the company, were forecast at $41.25 billion. Analysts also anticipated a gross margin of approximately 72%, confirming expectations of high production efficiency and cost management.

NVIDIA exceeded market expectations both in total revenues and EPS, confirming its strong position in the semiconductor and AI technology markets. However, investor satisfaction was not complete. Revenues from the key Data Center segment, although record-breaking, were slightly below the most optimistic forecasts, resulting in a cooler market reaction than might be expected given the scale of the results.

• Revenues amounted to $46.74 billion, about 1.5% higher than expected.

• EPS reached $1.05 non-GAAP and $1.08 GAAP.

• Data Center revenues were $41.1 billion, slightly below market forecasts (~$41.2 billion according to some analysts). Despite the small miss, this segment remains the company’s primary revenue source and growth driver fueled by demand for AI infrastructure, machine learning, and cloud solutions.

Key Observations

Source: XTB Research

• The Data Center segment generated revenues of $41.1 billion, a 56% year-over-year increase. This segment forms the foundation of NVIDIA’s business, accounting for about 88% of total revenues. Growth is driven by rising demand for AI, machine learning, and cloud computing solutions.

• The Compute segment earned $33.8 billion, up 50% year-over-year. This is a crucial part of the data center segment, accounting for most sales of GPUs used in AI, HPC, and cloud computing. A slight revenue decline from the previous quarter resulted from export restrictions on H20 chips intended for the Chinese market.

• The Gaming segment brought in $4.3 billion, a 49% increase compared to the previous year. This result stems from strong demand for GeForce RTX 50 series graphics cards and new technologies like DLSS 4, which enhance game performance and visual quality.

• The Professional Visualization segment achieved $601 million in revenues, up 32% year-over-year. Products in this segment are used by digital creators, engineers, and scientists for advanced graphic projects and simulations.

• The Auto segment generated $586 million, a 69% increase year-over-year. The growth of autonomous vehicles and advanced driver-assistance systems (ADAS) drives demand for NVIDIA solutions in this industry.

• Additionally, the OEM and Other segment reported $173 million in revenues, a 97% increase compared to the same period last year.

Market Forecasts

Source: Bloomberg Finance LP

Market expectations for NVIDIA remain very high, reflecting its dominance in AI and semiconductor sectors. Analysts forecast that in fiscal year 2026, the company will reach $204.8 billion in revenues, a 57% increase over the previous year. In just the second quarter of fiscal 2026, NVIDIA recorded $46.74 billion in revenue, meeting expectations, though showing a gradual slowdown in growth rate from 69% year-over-year in Q1 to a projected 53% in Q4.

The market also expects dynamic profit growth. The price-to-earnings (P/E) ratio is forecast to fall from the current 51 to 32.36 over the next four quarters, while the EV to EBITDA ratio is expected to decrease from 49.6 to 26.69. This means the company’s high valuation is based on investors’ strong belief in continued business growth and improved profitability. NVIDIA must not only continue developing but do so according to ambitious forecasts. Any even minor deviation from expectations could be negatively received by the market.

Competition with AMD and the Chinese Market

On the global GPU market, NVIDIA dominates, holding a decisive majority in the dedicated GPU segment, especially those used in AI, machine learning, and data centers. AMD, despite an improving product lineup, holds about a 15% market share, focusing on both consumer and server markets. NVIDIA strengthens its leadership position with the H100 series and the upcoming Blackwell generation, controlling the key AI GPU segment, which has become the main growth driver in the semiconductor industry.

The power dynamics in China are similar. NVIDIA dominates the GPU market, while AMD gradually increases its presence, offering cheaper but competitive solutions. The Chinese market is extremely important for both companies; however, geopolitical tensions and U.S. export regulations complicate expansion. NVIDIA, in particular, feels the impact of bans on selling advanced AI chips like the H100 and H20, forcing the company to cancel some shipments to China. This resulted in write-offs of about $5.5 billion and revenues about $2.5 billion lower than initial forecasts. Although sales to China are still possible with U.S. government approval and compliance with specific requirements, the situation has clearly become more difficult. The U.S. introduced a 15% export tax on chips, formally allowing sales of advanced units to China while maintaining strict control over the process.

Simultaneously, the Chinese government intensifies support for the domestic semiconductor ecosystem, investing in local companies such as Huawei, Iluvatar CoreX, Biren Technology, and Moore Threads. New regulations on energy efficiency in Chinese data centers may limit demand for products that do not meet specific standards, potentially impacting some NVIDIA chips. Furthermore, Chinese authorities are investigating hardware security issues, further complicating the operations of American companies in this market.

Valuation Overview

We analyzed NVIDIA’s valuation using the discounted cash flow (DCF) method. It is important to emphasize that this analysis is for informational purposes only and should not be considered investment advice or an exact stock price forecast.

Projections assume a double-digit average annual revenue growth for NVIDIA, estimated between 40-55%. Our calculations reflect this range, with particular attention to the strategic importance of the Chinese market. Access to such a large and dynamic market can significantly contribute to further revenue growth. China’s market, as one of the largest globally, forms an important foundation for optimistic future performance forecasts for NVIDIA.

Additionally, NVIDIA maintains a technological edge with advanced products such as the H100 series and the new Blackwell generation. Strong innovation enables the company to maintain its market leadership, especially in the AI and data center segments, which are key growth engines.

Valuation also considers a weighted average cost of capital (WACC) estimated at around 10%, based on the current market situation and the technology sector’s specifics. NVIDIA has a moderate level of debt that is effectively managed, causing the cost of debt to have a limited but significant impact on the overall cost of capital. We assumed a terminal growth rate of 2%, while other parameters were based on five-year averages.

Based on these assumptions, NVIDIA’s valuation is approximately $304.45 per share, indicating a growth potential of about 68% compared to the current market price. The current valuation may therefore not fully reflect the company’s value and growth prospects. We believe NVIDIA stands before a chance for further dynamic expansion driven by growing demand for modern AI, data center, and gaming solutions, as well as increasing presence in key markets such as China.

Source: xStation5

Technical Chart Outlook

From a technical analysis perspective, NVIDIA’s stock is in a clear uptrend, confirmed by dynamically rising moving averages (EMA 50, 100, and 200), forming a classic bullish sequence. The current chart structure does not indicate any weakening of this trend. Prices remain above all key averages, and potential corrections are shallow and quickly absorbed by buyers. If strong demand for AI chips and a favorable tech sector environment continue, the scenario for further growth in the medium term remains very plausible.

Source: xStation5