The actions of the semiconductor giant Nvidia(Nasdaq: NVDA) are down approximately 5% so far in 2025. Despite solid fundamentals, the company’s shares have landed on market concerns concerning a potential slowdown in expenditure linked to artificial intelligence (IA) in next months. Wall Street panicked after the Chinese start-up Deepseek announced the formation of an open source AI model, Deepseek-R1, for less than $ 6 million-significantly less than 100 million dollars used to form GPT -4 of Openai.
However, many experts in the industry are now doubt about Deepseek’s assertions concerning the formation of the model with only 2,000 H800 graphic treatment units (GPU) unlike 25,000 H100 GPU for GPT-4. The CEO of the AI scale, Alexander Wang, suggested that Deepseek used up to 50,000 H100 chips, but has not revealed this due to American export controls. Although Wang has provided no evidence, this raises questions about the credibility of Deepseek’s claims.
However, even if Deepseek has managed to carry out costumes in the AI generator space, it can possibly prove to be beneficial for Nvidia. The technology being increasingly profitable and effective, demand will increase, which will increase the total addressable market and sales of chips optimized in AI.
Consequently, Nvidia seems negatively affected by disproportionate fears. It can be logical for clever investors to buy this stock on the recent drop. Here are some reasons why I think it is a convincing choice in 2025.
Nvidia recently managed to demonstrate high -scale high and interval performances. During its third quarter for the year 2025 (completed on October 27, 2024), income climbed 94% from one year to the next to 35.1 billion dollars, mainly driven by a leap of 112 % from one year on the other of income from data centers to $ 30.8 billion. The company also has impressive raw margins in the percentage range of the mid-1970s, although these could be modestly affected in the period of initial power of Blackwell systems.
Thanks to the solid profitability of the company, NVIDIA is committed to referring a significant value to the shareholders. In the third quarter, the company rendered $ 11.2 billion as dividends and share buybacks.
Finally, management provides that revenues reach 37.5 billion dollars more or less 2% in the fourth quarter. The high visibility of income is awarded to the continuous demand for hopper architecture and the initial rise of Blackwell systems. With the demand for AI chips exceeding the supply, the company should benefit from significant price power in the coming months.
The infrastructure solution AI from start to finish of Nvidia, Blackwell, should play a central role in maintaining the domination of Nvidia in the accelerated IT space, especially since the workloads of the AI become of More and more demanding and complex. This infrastructure solution supports seven different chips, several networking offers and cooled data centers and cooled by liquid.
In addition, according to the recent results of the MLPERF training, Blackwell has demonstrated 2.2 times better performance and 4 times lower IT costs compared to the previous generation chips performing the GPT-3 reference model. Subsequent cost savings and high flexibility should result in even higher demand for blackwell systems in all deployment industries and environments.
Nvidia is currently in complete production mode for Blackwell Systems. The company has sent 13,000 Blackwell GPU samples in the third quarter and expects BLACKWELL to come back to exceed the previous estimates of “several billion dollars” in the fourth quarter.
Companies are also increasingly opt for the NVIDIA AI Enterprise platform (which includes NVIDIA Nemo and NIM microservices) as an operating platform to develop co-pilots and personalized AI agents. Eminent companies such as DirtyCloudera, SAPAnd Serve Use this platform to accelerate the development of AI applications.
Subsequently, the company’s AI platform should become a major income engine in the coming months since nearly 1,000 companies already use Nvidia Nim. Management provides that NVIDIA AI Enterprise returned to more than one double from year to year during the year 2025. NVIDIA has successfully switched from a equipment to an IA infrastructure provider complete.
Nvidia also sees important opportunities in fields such as industrial AI, autonomous systems and robotics in which foundation models must interact and understand the physical world. The company is preparing to capitalize on these physical opportunities for AI with the omaverse platform of Nvidia and its new Cosmos technology.
NVIDIA is negotiating the long -term profits at around 28 times, which may seem expensive compared to traditional standards. However, several factors justify the apparently rich assessment. Analysts expect the company’s income and profits (BPA) to increase from one year to the other by 112% and 127%, respectively, during the 2025.
The chip giant is ready to benefit from the two fundamental changes in global IT: an upgrade cycle of billions of dollars in data centers to go from computer -based computer to accelerated computer processor and The emergence of AI factories producing 24/7 digital intelligence. Finally, despite sustainable competitive advantages, such as around 90% of the GPU global market sharing and a robust software ecosystem designed to take charge of its hardware offers, the company is negotiated with a price / growth price ratio (PEG) of only 0.2.
Thus, given the future growth potential of the company, Nvidia seems to be an intelligent choice for 2025.
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Manali Pradhan Has no position in the actions mentioned. The Motley Fool has positions and recommends Nvidia, Salesforce and ServiceNow. The Word’s madman has a Disclosure policy.
