More people started gaming during the pandemic, which expanded the market for gaming hardware. The gaming segment generated $10.5 billion in revenue over the last four quarters, or 48% of the company's business, with gaming revenue up 85% year over year in the fiscal second quarter. Since then, Nvidia's data center revenue has grown from 10% of its business to 36%, yet its core business of selling GPUs to gamers hasn't taken a back seat. The boom in gaming hardwareĪt this time in 2016, Nvidia was just getting started in applying its core graphics-processing technology to the booming data center market. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.Image source: Getty Images. Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Nvidia will also need to deal with upcoming challengers in AMD’s Aldebaran and Intel’s Ponte Vecchio data center GPUs. While AMD recently announced its latest EPYC CPUs will be adopted at Meta, we still expect Intel’s CPUs to also be prominent in their data centers. Consequently, we think the market has anointed Nvidia and its GPUs as the primary beneficiary of recent capital expenditure plans from Meta ($29 billion to $34 billion in 2022 compared with $19 billion in 2021). Nvidia’s GPUs and other data center hardware and software products are likely to be heavily implemented in future metaverse platforms from the likes of Meta (formerly Facebook), Microsoft, and others. We note the firm’s Omniverse platform is Nvidia’s own metaverse offering tailored to 3D design collaboration and simulation as well as avatars for customer support applications.

We do not dispute Nvidia’s AI acceleration leadership, but think current share prices do not account for competition from AMD, Intel, or hyperscale customers themselves. To justify Nvidia’s current $300 stock price, we think revenue would need to grow at a nearly 30% CAGR over the next five years to about $57 billion in 2025, with data center sales growing at a 40% CAGR.

Nvda price prediction 2025