Should You Buy Nvidia Stock After It Posts a 200% Gain in 2024? Wall Street gives an almost unanimous answer.

Taken together, big tech’s high capital expenditures and the results of Palantir and Taiwan Semiconductor leave little doubt that demand for AI remains strong.

Without Nvidia’s graphics processing units (GPUs) to power the technology, AI – at least as we know it today – would likely not exist. The company pioneered parallel processing, or the ability to perform large numbers of mathematical calculations by breaking huge amounts of data into smaller, more manageable chunks. This technology gave Nvidia an advantage that the company never relinquished.

Although GPUs were originally designed to make graphics in video games more realistic, parallel processing proved just as adept at performing compute-intensive tasks like AI. As a result, Nvidia has become the gold standard in the cloud and data centers, where much of the AI ​​processing takes place.

According to semiconductor analyst firm TechInsights, Nvidia captured a dominant 98% share of the data center GPU market in both 2022 and 2023. Given the company’s relentless pace of innovation, it’s unlikely it has shed much of that share this year.

This dominance has fueled the company’s financial results. For the second quarter of fiscal 2025 (ending July 28), Nvidia generated record revenue that rose 122% year over year to $30 billion. The results were driven by record data center revenue that rose 154% to $26.3 billion. Earnings also rose sharply, resulting in diluted earnings per share rising 168% to $0.67.

Two elements in the report made investors wary. The first issue had a gross margin of 75.1%, compared to 78.4% in the first quarter. Since this latest figure was an all-time high, investors shouldn’t worry too much. Management blamed the issue on product mix and inventory determinations related to the upcoming release of its Blackwell AI processors.

The second problem was the company’s forecast for 79% revenue growth, a marked slowdown from the triple-digit growth Nvidia has delivered for five consecutive quarters. Experienced investors will recognize that tough competition will eventually overtake the company, as is the case here. That said, 79% growth is still enviable.

Wall Street analysts rarely agree on anything, so when they do agree, it’s remarkable. That is the case with Nvidia, which still has a buy recommendation. The bullish sentiment is almost unanimous: of the 64 analysts who issued a recommendation in October, 92% rated the stock as buy or strong buy, and no recommended sale. With so many diverse opinions, it is unusual for Wall Street to reach such a near-universal consensus.

But given Nvidia’s continued string of successful financial results, perhaps it’s not so surprising after all. Rosenblatt analyst Hans Mosesmann is the self-proclaimed biggest Nvidia bull on Wall Street. He maintains a buy rating and a Street-high price target of $200 on Nvidia, which represents an additional 37% upside from Wednesday’s close – even after the record run.

While some investors have worried about Nvidia’s declining gross margins, Mosesmann is undeterred. He believes the problem is a result of the company’s rapid product development and says it is a “top-tier problem.” He further pointed to the continued strength of Nvidia’s Hopper architecture, while suggesting the company’s new AI-centric Blackwell chip will “grow fast” in the fourth quarter of 2025, which ends in January.

The most consistent question from investors is about Nvidia’s valuation. The stock is currently selling for 70 times earnings, so their concerns are understandable. The point is: Analyst consensus estimates for Nvidia’s 2026 fiscal year, which starts in January, predict earnings per share of $4.06. That means the stock is currently selling for just 37 times forward earnings.

While that’s a premium for the overall market, it’s a small price to pay for a market leader with strong secular tailwinds and an impressive track record of execution. That’s why Nvidia stock is still a buy, even after a 200% gain so far this year.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

Should You Buy Nvidia Stock After It Posts a 200% Gain in 2024? Wall Street gives an almost unanimous answer. was originally published by The Motley Fool