08. NVIDIA Corporation (NASDAQ:NVDA)
Upside Potential: 19.30%
Latest Average Share Price Target: $142.10
NVIDIA Corporation (NASDAQ:NVDA) is a key player in the data center market, offering high-performance compute and networking solutions that cater to cloud service providers (CSPs), enterprises, and consumer internet companies. Its data center segment is crucial to its inclusion among the best data center stocks to buy. The company’s latest quarterly performance highlights robust growth driven by its AI and networking platforms, with the data center revenue reaching a record $26.3 billion, up 16% sequentially and 154% year-over-year.
NVIDIA Corporation (NASDAQ:NVDA) impressive Q2 2025 earnings call demonstrated strong financial performance, beating earnings expectations with reported EPS of $0.68, surpassing estimates of $0.645. The company’s total revenue hit $30 billion, up 15% sequentially and 122% year-on-year. A key growth driver was the surging demand for NVIDIA Hopper GPU computing and its networking platforms. Notably, compute revenue grew over 2.5 times and networking revenue more than doubled compared to the previous year.
The rise of generative AI has been a significant contributor to NVIDIA Corporation (NASDAQ:NVDA) data center expansion. Generative AI model training, inferencing, and other AI-powered workloads are driving demand for NVIDIA Corporation (NASDAQ:NVDA) computing solutions. The company’s Hopper architecture, which is widely adopted across CSPs and enterprises, is set to be followed by the next-generation Blackwell platform, expected to ramp up in Q4 2025. NVIDIA’s AI enterprise ecosystem is also benefiting from the adoption of its technology across various industries, including healthcare, education, and robotics.
NVIDIA Corporation (NASDAQ:NVDA) gross margins remain strong, with non-GAAP gross margins at 75.7% in Q2. The company’s cash flow from operations was $14.5 billion, highlighting its solid financial footing. Moreover, NVIDIA returned $7.4 billion to shareholders through share repurchases and dividends, further bolstered by a $50 billion share repurchase authorization. Given its robust fundamentals, dominance in the AI-driven data center market, and continued innovation in networking solutions, NVIDIA Corporation (NASDAQ:NVDA) is positioned as a top data center stock to buy, offering significant growth potential in the ever-expanding AI and cloud computing landscape.
Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
