Should you buy Nvidia stock after it posts a 200% gain in 2024? Wall Street provides an almost unanimous answer.

Another week, another new all-time high for Nvidia (NVDA -1.80%). The shares climbed to record levels again on Thursday after a new watermark was set on Wednesday. In recent years, the stock has regularly reached new heights, driven by the rapid adoption of artificial intelligence (AI). In 2024 alone, Nvidia is up 200% (as of this writing) and looks poised to climb even higher.

After a rally of this magnitude, some investors are understandably cautious, concerned about the possibility of a slowdown in AI adoption and Nvidia’s high valuation. Let’s take a look at the general state of AI, Nvidia’s place in the bigger picture, and what Wall Street is saying about the company’s potential.

The state of AI adoption

Investors looking to understand the state of generative AI adoption need to look to cloud infrastructure providers, the largest providers of AI to the masses. Amazon, MicrosoftAnd alphabet are the three major cloud providers, and all three released their third quarter calendar results in the last week of October.

Executives from both companies pledged to continue investing heavily in AI, with the majority of those investments going toward the servers and data centers needed to power their AI efforts. Metaplatformswhich has leveraged its trove of customer data to power its Llama AI model, also plans to further increase spending to support its AI development.

Investors can also see the results of other notable companies at the forefront of AI technology. Just last week, Palantir Technologies (PLTR 3.82%) delivered third-quarter results that exceeded expectations, driven by “relentless AI demand,” according to CEO Alex Karp. Revenue increased 30% year-over-year, resulting in a 100% increase in earnings per share (EPS).

The results were driven by demand for its Artificial Intelligence Platform (AIP), the flagship product of its commercial AI segment. U.S. commercial revenue increased 54%, driven by a 77% increase in customers. As a result, the segment’s remaining deal value increased by 73%.

Taiwan semiconductor manufacturing (TSM -3.73%) is a chip foundry and the leading manufacturer of high-end chips for AI. The company also reported results, adding to the growing body of evidence that demand for AI is alive and well. Revenue rose 39% year-over-year, while earnings per share rose 54%. The company cited strong “AI-related demand” as driving the results.

Overall, high capital spending by major technology companies and the results of Palantir and Taiwan Semiconductor leave little doubt that demand for AI remains strong.

Nvidia’s place in the ecosystem

Let there be no doubt: without Nvidia’s graphics processing units (GPUs) powering the technology, AI – at least as we know it today – probably wouldn’t exist. The company pioneered parallel processing, the ability to perform large-scale mathematical calculations by breaking huge amounts of data into smaller, more manageable blocks. This technology gave Nvidia an edge that the company never relinquished.

While GPUs were originally designed to make images in video games more realistic, parallel processing proved just as capable of running computationally intensive tasks as AI. This has made Nvidia the gold standard in the cloud and data centers, where much of the AI ​​processing takes place.

Nvidia captured a dominant 98% share of the data center GPU market in 2022 and 2023, according to semiconductor analyst firm TechInsights. Given the company’s relentless pace of innovation, it’s unlikely it has given up much of that share this year.

This dominance has boosted the company’s financial results. In the second quarter of fiscal 2025 (ending July 28), Nvidia posted record revenue, rising 122% year-over-year to $30 billion. Key to the results was record data center revenue, which rose 154% to $26.3 billion. Earnings also rose sharply, resulting in diluted earnings per share rising 168% to $0.67.

Two elements in the report caused concern among investors. The first offering achieved a gross margin of 75.1%, compared to 78.4% in the first quarter. Given that the latter figure was an all-time high, investors shouldn’t worry too much. Management attributed the issue to product mix and inventory constraints related to the upcoming release of its Blackwell AI processors.

The second topic was the company’s forecast for 79% revenue growth, a clear slowdown from the triple-digit growth Nvidia has achieved for five consecutive quarters. Savvy investors will recognize that fierce competition will eventually catch up with the company, as is the case here. Nevertheless, 79% growth is still enviable.

Image source: Getty Images.

Wall Street is extremely optimistic

Analysts on Wall Street rarely agree on anything. So if they agree, that’s remarkable. This is the case with Nvidia, which still has a buy rating. The optimistic sentiment is nearly unanimous: Of the 64 analysts who commented in October, 92% rated the stock as a “buy” or “strong buy.” none recommended sale. With so many different opinions, it’s unusual for Wall Street to reach a near-universal consensus like this.

However, given Nvidia’s continued blockbuster financial results, perhaps this isn’t so surprising after all. Rosenblatt analyst Hans Mosesmann says he is the biggest Nvidia bull on Wall Street. He maintains his Buy rating and $200 high price target for Nvidia, representing an additional 37% upside from Wednesday’s closing price – even after the record run.

While some investors have been concerned about Nvidia’s declining gross margins, Mosesmann is undeterred. He believes the problem is due to the company’s rapid product development frequency and says it is a “high-profile issue.” He continued to point to the continued strength of Nvidia’s Hopper architecture while suggesting that the company’s new AI-centric Blackwell chip will “gather strong momentum” in the fourth quarter of fiscal 2025, which ends in January.

The most common question from investors concerns Nvidia’s valuation. In fact, the stock is currently selling for 70 times earnings, so their concern is understandable. Here’s the thing: Analysts’ consensus estimates for Nvidia’s 2026 fiscal year, which begins in January, are forecasting earnings per share of $4.06. That means the stock is currently selling for just 37 times expected earnings.

While that’s a premium to the overall market, it’s a small price to pay for an industry leader with strong long-term tailwinds and an impressive track record of execution. That’s why Nvidia stock is still a buy, even after posting 200% gains so far this year.