KEY POINTS

• The CEO thinks Nvidia sees booming AI data center spend.

• Spending projections from its largest clients haven't dropped -- a good sign.

• Meanwhile, the stock doesn't trade for much of a premium over the S&P 500.

Nvidia has been one of the companies that have been in the crosshairs of investors dumping stocks amid the market downturn. This shouldn't surprise anyone since Nvidia has been one of the best-performing stocks over the past few years, and many investors have made huge unrealized gains. But there's still plenty of upside for it, and I think right now could be a great buying opportunity.

The stock had phenomenal years in 2023 and 2024, and although 2025 is looking a bit shaky, I won't be surprised if it soars by the end of 2025.

Nvidia's GPUs are powering the AI arms race

Nvidia rose to become one of best AI stocks (if not the best) because it sells graphics processing units (GPUs) and the infrastructure to support them. GPUs are one of the more popular hardware options for training AI models because of their excellent computing ability and versatility.

GPUs can process multiple calculations in parallel, which makes them incredibly fast at processing complex calculations. While some types of computing equipment can outperform them, this requires the workload to be set up in a specific manner, which may not be possible depending on the situation.

As a result, GPUs have become the go-to option for many AI hyperscalers, including those building data centers. This has caused Nvidia to deliver unprecedented growth figures for its size.

NVDA REVENUE (TTM) DATA BY YCHARTS; TTM = TRAILING 12 MONTHS.

However, it's fairly obvious that its growth looks to be slowing (although 78% revenue growth is nothing to sneeze at). Still, this is the investor's primary concern with the company: When will enough computing power be enough?

Recently, CEO Jensen Huang spoke at the company's annual GTC event and boldly predicted that the data center total addressable market (TAM) will surpass $1 trillion by 2028. The company has been the leading player in GPUs, so it could likely convert much, if not all, of that market in revenue. Considering that Nvidia's data center revenue totaled $115 billion over the past 12 months, that prediction implies a lot more growth.

But is it an unreasonable prediction? I don't think so. In its fiscal 2025's fourth quarter (ended Jan. 26), Nvidia's data center business grew revenue at a 93% pace. For the data center divisions to reach $1 trillion in revenue by 2028, they would need to grow at a compound annual rate of 72%. So, Huang's bold projection shows a moderate slowdown in growth from today's levels but still a ridiculous pace overall.

This will be a key figure to watch in the quarters reported throughout 2025. If its data center growth trends lower and approaches that 70% pace, it will be clear that Nvidia likely won't hit its $1 trillion projection. But if it stays elevated in the 80% to 90% range, then it could have a shot at hitting its lofty $1 trillion revenue goal.

The $1 trillion goal may be a bit high, but investors should still understand that demand for GPUs isn't going anywhere. With high demand continuing, this should reassure investors.

The stock looks cheap in light of the massive growth

Now, with the stock down around 20% from its all-time high, it's a great time to look at scooping up shares. Following the sell-off, it now trades near the lowest levels it has seen over the past few years.

The stock looks like an absolute steal at 26 times forward earnings; many big tech companies still trade for much higher than that despite much worse growth prospects. Considering that the S&P 500 trades for 21 times forward earnings, you don't have to pay much of a premium to own one of the biggest growth stocks of our time.

Even if Nvidia falls short of its lofty $1 trillion projection, it will still put up monster growth, thanks to the huge spending from the AI hyperscalers. I think Nvidia's stock is just getting started, and with the shares on sale, now makes for an excellent time to take advantage.