Meta platforms just hinted that Nvidia will have a monster in 2025

As we enter the final quarter of 2024, some investors may be thinking about how they want to position their portfolio through 2025. This includes evaluating winners and losers and whether you bought Nvidia (NVDA 2.84%) If you value the stock at the start of the year, you can look forward to some nice gains.

With the stock up around 150% so far in 2024, investors might think it can't go up any further. However, some evidence from other companies' conference calls suggests that 2025 will be just as good a year for the company as 2024. The question is: will the stock reap the same benefits?

Meta will purchase a number of more GPUs in 2025

Nvidia's incredible rise is tied to the artificial intelligence (AI) arms race. Its main product is the graphics processing unit (GPU), which allows multiple calculations to be performed in parallel. Additionally, companies don't just buy one or two of these units. Instead, they buy them by the thousands. This gives AI researchers incredible computing power and allows them to train AI models quickly.

The more complex these models become, the longer it takes to train them. Take Metaplatforms' (META 1.04%) For example, the generative AI model Lama. The current version is Llama 3.1, but Meta has already started training Llama 4. However, CEO Mark Zuckerberg noted that training time for Llama 4 will likely be 10 times as long as training for Llama 3. Beyond Llama 4, training time will likely increase again.

This isn't just a meta issue. ChatGPT by OpenAI, alphabetGemini and other generative AI models will experience the same phenomenon as these models improve and become more complex.

Do you think these AI innovators will just wait ten times longer to train their next AI model? Probably not. Instead, they increase their processing power to speed up the process, which benefits Nvidia significantly.

In its second-quarter earnings release, Meta also stated that its infrastructure costs will increase significantly in 2025. This is clearly related to the expansion of computing power to create the best possible AI model. Nvidia will primarily benefit from this, making it an interesting stock for 2025.

Nvidia is expected to see strong growth in 2025

Nvidia also has a few tricks up its sleeve for 2025: Blackwell technology is expected to come to market and, according to CEO Jensen Huang, will provide three to five times more AI throughput in a power-limited data center than Hopper, Nvidia's current architecture. This is a big deal, and Blackwell could become a new source of revenue for Nvidia. According to management, demand for Blackwell is currently “significantly higher than supply”.

This is just one of the reasons why Wall Street analysts believe Nvidia can grow revenue by 42% in fiscal 2026 (ending January 2026). Strong earnings growth is also expected, with earnings per share (EPS) expected to rise from $2.84 in fiscal 2025 to $4.02 in fiscal 2026. At today's prices, this would value the stock at about 30 times fiscal 2026 earnings.

Given Nvidia's growth, that's not too high a price for the stock if the company can sustain its business beyond the 2026 fiscal year.

Looking out one year is hard enough, but looking out two years is much harder. The big question is whether demand for Nvidia's GPUs will continue beyond fiscal 2026. If that's not the case, it's not worth buying Nvidia here. However, if this is the case, Nvidia stock could be a good buy right now.