Prediction: Here is the direction Nvidia is heading in 2025

There is no company that has benefited more from the artificial intelligence (AI) hype than Nvidia (NASDAQ:NVDA).

Demand for the company's graphics processing unit (GPU), data center services, and Compute Unified Device Architecture (CUDA) software has helped the stock rise an incredible 900% over the past two years.

Below, I'll examine what catalysts I think could cause Nvidia stock to continue rising, while also acknowledging some risk factors that could prevent the rise. At the end, I reveal my final forecast for where Nvidia shares could go in 2025.

What could cause Nvidia stock to rise?

In recent months, investors have gotten a better look at the spending plans of many of the tech sector's biggest players. Microsoft, Metaplatforms, alphabet, AmazonAnd Tesla Everyone recognized the need for more AI infrastructure.

Rising capital expenditures (capex) from major technology companies will provide a tailwind for Nvidia's computing and networking activities. More specifically, the company's launch of the Blackwell GPU will be a game-changer for Nvidia, and I suspect that these new chips will put the big tech companies first.

Nvidia CEO Jensen Huang recently said that demand for Blackwell is “insane,” while CFO Colette Kress said that “we expect Blackwell sales to be in the billions of dollars in the fourth quarter.”

Next year's Blackwell production, combined with further planned spending by major tech companies, should bode well for Nvidia. Therefore, it wouldn't surprise me to see Nvidia stock rise in 2025.

Image source: Getty Images

What could cause Nvidia stock to fall?

One of my biggest concerns about Nvidia comes from the competition. While each of the mega-cap tech companies mentioned above are believed to be among Nvidia's largest customers, their plans to spend more on AI infrastructure isn't all good news for the company.

Many of these tech giants have already started developing their own chips to break away from their dependence on Nvidia. These moves could impact Nvidia and lead to a slowdown in sales and profit growth. As a result, Nvidia shares could slide.

It's this particular dynamic that makes me curious as to why big-name hedge funds like Ken Griffin's Citadel and David Shaw's DE Shaw have reduced their Nvidia positions. Even against the backdrop of the Blackwell launch, so-called smart money hedge funds appear to be taking profits from Nvidia shares.

I think some of the sales activity is influenced by the fact that with each earnings report, expectations for Nvidia rise. Assessing the success of the Blackwell launch is quite subjective. Even if these new GPUs help drive further record growth for Nvidia, investors' expectations may differ from reality.

Subsequently, both retail and institutional investors could punish the stock, and Nvidia shares could see a sharp sell-off.

My forecast for Nvidia's price development in 2025

I know this may seem like I'm trying not to make a clear prediction, but I believe Nvidia stock will be little changed in 2025. There are several factors that could encourage further buying and selling of Nvidia stock next year, yet I find that none of these materials are enough to cause an annual gain or decline.

I would think about whether Nvidia stock could rise another 900% next year or even in 10 years. In my mind, I think the answer is no. While there's probably good money to be made owning Nvidia stock in 2025, I think timing will be an important factor here.

However, as a long-term investor, I try to avoid timing stocks and instead look for quality companies that can post consistent profits over many years.

Can Nvidia continue like this? Perhaps. But to me, there's a good chance that Nvidia stock has peaked and its best days are in the rearview mirror.

Should you invest $1,000 in Nvidia now?

Before you buy Nvidia stock, consider the following:

The Motley Fool Stock Advisor The analyst team has just identified what they think this is The 10 best stocks so investors can buy it now… and Nvidia wasn't one of them. The ten stocks that made the cut could deliver huge returns in the years to come.

Think about when Nvidia created this list on April 15, 2005… if you have $1,000 invested at the time of our recommendation, You would have $765,523!*