We recently published a list of 10 Most Profitable Tech Stocks to Buy Now. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other most profitable tech stocks to buy now.
Profitability remains one of the most sought-after traits in the technology sector, yet it is also one of the most complex. It is shaped by a delicate balance of investment cycles, competition, and market perception. While topline growth often takes center stage—driving valuations and attracting top talent—sustained profitability becomes crucial as industries mature, competition peaks, and new investments become necessary for survival. In this ever-evolving landscape, technology companies have mastered the art of balancing revenue expansion with profit growth by diversifying their businesses, building vast customer ecosystems, and continuously enhancing product experiences.
Looking ahead, earnings growth will take on an even greater role in determining valuations, particularly as the breakneck pace of growth begins to slow. Investors will increasingly focus on sustainable profitability rather than just rapid growth. In a January 2024 article, Rob Haworth, Senior Investment Strategy Director at U.S. Bank Asset Management, emphasized that technology companies possess strong earnings growth potential, largely independent of traditional business cycles. He explained:
“What is not clear yet is how companies investing in AI as a way to increase efficiencies or monetize services for end users will benefit from these advancements. We’re in a consolidation phase to figure out what revenue growth will be going forward. If AI helps boost productivity, that will support not only current rising stock valuations but individual prosperity as well.”
Franklin Templeton’s 2025 Technology Outlook echoes this sentiment, predicting another year of strong growth in the sector. The report notes that the “Magnificent Seven”—a group of leading tech giants—delivered exceptional earnings in 2024, outpacing both the broader market and the tech industry itself. While these companies are expected to maintain strong momentum, The firm anticipates that the rest of the sector may start catching up in 2025.
Tech investments are projected to grow exponentially in the coming years, reshaping the profitability landscape. Emerging technologies such as artificial intelligence, quantum computing, and autonomous systems present both immense opportunities and significant challenges. Some companies will achieve sustainable profit margins through strategic pricing and ecosystem advantages, while others will struggle under the weight of fierce competition and heavy reinvestment costs. For investors and stakeholders, understanding these shifting dynamics is key to navigating the ever-changing tech sector.
Our Methodology
To identify the 10 most profitable stocks, we conducted extensive research on U.S.-listed technology and tech-adjacent companies with a market capitalization of at least $2 billion. Rather than relying solely on absolute net income, we refined our selection criteria by focusing on companies with both an operating margin and net profit margin exceeding 20%. This approach ensures that high-margin firms are not overshadowed by larger corporations with higher overall earnings. After applying these filters, we ranked the stocks in ascending order based on their trailing twelve-month net income, with the company reporting the highest net income securing the top position.
Note: All pricing data is as of market close on February 14.
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A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
TTM Net Income: $63.0 billion
Number of hedge funds: 193
NVIDIA Corporation (NASDAQ:NVDA) designs and manufactures graphics processing units (GPUs), system on a chip units (SoCs), and AI hardware and software. Over the years, the company has expanded its offerings from gaming GPUs to include data center solutions, AI computing, and deep learning technologies. The company’s GPUs are widely used in data centers for high-performance computing, AI training, and inference, making it a critical player in the data center ecosystem. Its products are essential for powering advanced applications in AI, machine learning, and data analytics. NVIDIA Corp. (NASDAQ:NVDA) boasts the best margin profile among the companies in this list. It commands an operating margin of around 63% and net profit margin of 56%.
NVIDIA Corp. (NASDAQ:NVDA) has transitioned from a PC gaming GPU company to a dominant player in the accelerated computing space, offering full-stack computing infrastructure with data-center-scale solutions. The company’s strength is evident in its commanding over 80% market share in GPUs. NVIDIA has greatly benefited from the growing adoption of AI and machine learning technologies, driving strong demand for its chips. The company’s revenue, profitability, and market capitalization have surged since the introduction of GenAI models like ChatGPT.
Despite recent concerns surrounding DeepSeek, analysts continue to view the stock as a consensus Buy, predicting an upside of approximately 26%. On January 28, Tigress Financial Partners upgraded the stock’s rating from Buy to Strong Buy and increased the price target from $170 to $220. According to Tigress Financial’s analysts, total capital investment in AI-driven and data center development is expected to surpass $330 billion in 2025, up from just under $250 billion in 2024. They also project that investments could potentially reach $400 billion by 2026. Given its robust positioning, NVIDIA Corp. (NASDAQ:NVDA) is poised to be a significant beneficiary of these investments and will continue to influence the future of AI and data center technology.
Overall, NVDA ranks 4th on our list of most profitable tech stocks to buy now. While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
