Nvidia (NVDA) stock’s performance has been extraordinary over the past couple of years. As the leader in graphics processing units (GPUs) central to the artificial intelligence (AI) revolution, Nvidia has experienced a meteoric rise.

To put this into perspective, Nvidia stock has surged approximately 128% year-to-date and an impressive 583.8% over the past two years. This remarkable ascent even propelled Nvidia to briefly surpass Microsoft (MSFT) as the most valuable company in the U.S. in terms of market capitalization.

While Nvidia delivered massive gains, its impressive rally has led to valid concerns about whether its stock can maintain its momentum, or if it is time to reconsider investments at these elevated levels. However, several factors suggest that Nvidia’s growth trajectory remains robust, and the stock may continue to climb in 2024.

Nvidia’s GPUs are integral to developing and deploying generative AI applications and large language models (LLMs). So, as AI adoption accelerates across various sectors, Nvidia’s role as a key enabler of this technology positions it for sustained growth. Moreover, Nvidia’s product innovation and new launches will likely help the company maintain its dominance in the fast-growing AI market. 

Here’s a closer look at why Nvidia’s stock might keep climbing.

Nvidia’s Data Center Dominance

Nvidia’s Data Center segment has been a powerhouse, delivering record revenues of $22.6 billion in Q1 of fiscal 2025. This represents a 23% increase sequentially and a staggering 427% increase year-over-year. The surge in revenue reflects booming demand for Nvidia’s Hopper GPU computing platform. Compute revenue has soared more than fivefold, while networking revenue has tripled compared to the previous year.

What’s important is that this phenomenal growth is driven by a diverse customer base, including major cloud providers and enterprise firms. These large-scale clients account for about 45% of Data Center revenue, highlighting the increasing reliance on Nvidia’s AI infrastructure solutions.

Nvidia’s Data Center revenue is becoming increasingly diversified as countries worldwide invest in sovereign AI, building domestic computing capacity. Nvidia's comprehensive offerings enable these countries to jumpstart their AI ambitions, with potential revenue from sovereign AI expected to approach the high single-digit billions this year.

Product Innovation Support Future Growth

Nvidia’s innovation pipeline is a key driver of future growth. Demand for Nvidia’s Hopper H100 GPU remains strong, and Nvidia’s innovations have led to a significant advancement in LLM inference. This breakthrough can potentially reduce operational costs for deploying popular AI models, presenting a solid value proposition for businesses investing in AI infrastructure, in turn, driving demand for NVDA's products.

Further, Nvidia is on track with the production and shipment of the H200 GPUs, which will nearly double the inference performance of the H100. This development will likely drive future revenue growth, as demand for high-performance AI solutions continues to surge.

The company’s recently introduced Blackwell GPU architecture delivers faster training and inference with lower energy consumption. Its broad adoption is expected to drive rapid market penetration and growth.

Nvidia’s InfiniBand continues to drive its networking revenues. Additionally, the launch of the Spectrum-X Ethernet solution, optimized for AI, offers higher performance compared to traditional Ethernet. This innovation opens up new market opportunities and positions Nvidia for substantial growth in the Ethernet networking space.

Further, Nvidia highlighted that the Spectrum-X platform is experiencing a ramp-up in volume with major customers, which is encouraging. Its design for large-scale AI processing and anticipated broad adoption could position Spectrum-X as a multibillion-dollar product line within the next year.

Expanding Horizons

Beyond its Data Center, Nvidia is also well-positioned for growth in other sectors, such as gaming and automotive. The company said during the recent conference call that the GeForce RTX Super GPUs have been well-received in the gaming market, with healthy demand and inventory levels. Nvidia’s technology stack supports fast and efficient generative AI inference on GeForce RTX PCs, which will likely boost gaming revenues.

In the automotive sector, Nvidia’s expanding customer base, advancements in AI cockpit solutions for global OEMs (original equipment manufacturers), and its strength in self-driving platforms indicate promising future growth opportunities.

The Bottom Line for NVDA Stock

Nvidia’s remarkable stock performance has been driven by solid fundamentals and growth prospects. The company’s leadership in generative AI, expanding market opportunities, and strong financial position suggest that the stock’s upward trajectory could continue into 2024 and beyond. Moreover, the recent pullback could be a buying opportunity.

Analysts share this optimism, with 33 out of 39 recommending a “strong buy,” two suggesting a “moderate buy,” and four advising a “hold,” reflecting a consensus rating of “Strong Buy.” 

The average price target for Nvidia’s stock is $141.29, indicating a decent potential upside of about 25% from recent levels.

In summary, Nvidia remains a compelling investment for investors looking to capitalize on a leader in the AI space.