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As of 11:19 AM GMT-5 on January 8, 2025, NVIDIA Corporation (NASDAQ: NVDA) is trading at $140.36, up by $0.22 or +0.16% from its previous close. Despite a slight increase in price on the day, NVIDIA’s stock has shown remarkable momentum recently, and its market capitalization has reached an impressive $3.438 trillion. This surge follows a stunning 171% gain in 2024, and the stock is up around 9% so far in 2025, outpacing the S&P 500’s year-to-date returns by almost eight percentage points.
However, with such extraordinary growth, investors are left wondering whether the stock’s price can continue its rapid rise. Here’s a closer look at the key drivers behind NVIDIA’s stock performance and potential risks for the future.
Reasons for NVIDIA’s Stock Surge
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- Revenue Growth: NVIDIA has experienced exceptional growth in its business, with revenue soaring 94% year-over-year in its most recent quarter to $35.1 billion. A substantial portion of this growth can be attributed to the data center segment, which saw a 112% year-over-year increase, contributing to 88% of the company’s total revenue.
- AI-driven Demand: The rising demand for artificial intelligence (AI) technology has played a significant role in NVIDIA’s growth. As businesses and governments increasingly adopt AI for critical infrastructure, the demand for NVIDIA’s GPUs has skyrocketed. CEO Jensen Huang emphasized this in the company’s earnings call, stating that AI is propelling a global shift to NVIDIA computing.
- Strong Profitability
- Net Income: NVIDIA’s net income surged to $19.3 billion, more than doubling the previous year’s net income of $9.2 billion. This profitability is a direct reflection of the booming demand for its AI and data center solutions.
- Solid Financial Position
- Cash Reserves: With $38.5 billion in cash, cash equivalents, and marketable securities, NVIDIA is well-equipped to support further growth initiatives. The company has also allocated $26 billion toward share repurchases in the trailing nine months, reinforcing investor confidence. Disclaimer: The information provided in this article is for informational and educational purposes only and should not be construed as financial or investment advice.