NVIDIA shares will soar in 2025 (this is due to this number)

Nvidia (NASDAQ: NVDA) Over the past five years, it has brought amazing returns to investors, more than 1,400%. This is thanks to the company's dominance in the artificial intelligence (AI) revolution and the explosive explosion of revenue growth. In another quarter, NVIDIA has reached double or triple digit revenue and reached record levels.

However, in recent times, investors are concerned about future growth amid uncertainty over import tariffs and restrictions on exporting AI chips to China, which has brought NVIDIA shares to a 29% drop from the beginning of the year to the lowest point in April.

Today, NVIDIA has rebounded from these lows. This is because optimism is that the tariff picture will not be as dark as originally expected, and as technology customers continue to spend a lot of money on Nvidia's products and services. Now, my prediction is that the positive momentum for NVIDIA may not be over yet, and the stock will soar in 2025 due to a specific number. Let's explore further.

Image source: Getty Images.

So first, a quick look at why Nvidia stocks have soared over the past few years. The company is known for its graphics processing units (GPUs), high-power chips, and is able to handle many tasks simultaneously. They primarily served the gaming market years ago, but then Nvidia realized their broad potential and expanded it to other areas - AI stood out as a market where GPUs could shine.

In fact, GPUs are core for the most important AI tasks, such as training and inference for large language models (LLMS), so these models can then continue to solve complex problems. Nvidia has also built an entire ecosystem of supporting products and services, all of which have led to incredible growth. In the most recent fiscal year, revenues soared 114% to $130 billion.

This continued into the most recent quarter, and the earnings figures have proven that NVIDIA's customers continue to invest in the company's products. Revenues grew 69% to $44 billion during this period, and NVIDIA noted that the demand for inferred increased significantly - the “thinking” process LLMS by solving problems and problems.

Nvidia client reports, e.g. Meta Platform and lettersupporting the positive earnings trends we see in NVIDIA's fiscal first quarter of 2026. The players recently said that AI remains a priority and they will continue to invest heavily in IT – Meta has even added a year of capital expenditure forecast.

All of this supports the idea of ​​NVIDIA's stock market earnings this year. But a number in particular should encourage investors to enter NVIDIA, which could help stocks soar in the coming months. This figure reflects the company's high profits in sales. I'm talking about Nvidia's gross profit margin. The company has gross margins of more than 70% in recent quarters, even reaching the mid-term range of 70%.

Earlier this year, NVIDIA predicted that gross margins will drop to a 70% lower range in the first quarter with its Blackwell Architecture launch. (The launch involves additional costs, and Blackwell’s launch is particularly complex due to all its features as well as customizable features.) In the most recent quarter, NVIDIA achieved its target with a gross margin of 71.3%, excluding the impact of the $1 billion charge associated with the chips, which means exports to China.

(If we include the effect of charge, the gross margin is 61% on a non-GAAP (non-generating accounting process) basis and about 60% on a GAAP basis.

From here, NVIDIA expects gross margins to be 71.8% and 72% in the second quarter, respectively, GAAP and non-GAAP, respectively. Blackwell will continue to make progress, with gross margin expected to be 70% later this year, the company said.

Therefore, NVIDIA provides strong profitability and aims to continue to do so. Of course, the company still faces some headwinds, especially the restrictions on US chip exports to China. If this worsens, at least in the short term, it may allow the brakes to perform stock performance. It will be important to watch this story playback.

However, considering NVIDIA's impressive profitability for sales over time, I remain optimistic. Continued demand for its products and services should maintain this momentum. That's why I predict that the stock will soar in 2025 due to NVIDIA's reliable profitability.

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Alphabet executive Suzanne Frey is a member of the board of directors of Motley Fool. Randi Zuckerberg is a sister of former marketing development director, Facebook spokesperson, and Meta Platform CEO Mark Zuckerberg, and a member of the Motley Fools’ board of directors. Adria Cimino has no position in any of the stocks mentioned. Motley Fool has a location and recommends letters, metaplatforms and Nvidia. Motley Fool has a disclosure policy.

Prediction: NVIDIA stock will soar in 2025 (this is due to this number) originally published by Motley Fool