The GPU maker’s shares continue to defy expectations, but has the company’s growth peaked yet?
Artificial intelligence (AI) adoption continues at a rapid pace, but some are waiting for the other shoe to drop. A strengthening U.S. economy and robust quarterly results from several AI-related companies helped drive the increase Nasdaq Composite to a new record last week. Still, these same factors have some investors wondering whether the bull market has gone too far, too fast.
Nvidia (NVDA 1.99%) has become the de facto standard bearer for the generative AI industry. The company will report its third-quarter fiscal 2025 results in less than three weeks, and it’s no exaggeration to suggest that Wall Street is eagerly awaiting the clues the report will provide as to the state of play of AI adoption. Nvidia’s sales have soared since the start of last year, sending the stock up 833% (at the time of writing). It is also less than 5% away from the all-time high it reached late last month.
A lot is riding on Nvidia’s upcoming financial report, and many shareholders are wondering whether the stock can potentially continue its breathtaking run. Is it worth buying shares ahead of the financial report on November 20? Fortunately for investors, data is starting to pile up that can help answer this question.
Image source: Getty Images.
Sun on a cloudy day
The key to Nvidia’s astonishing successes in recent years has been Nvidia’s performance graphics processing units (GPUs)which are the best chips for delivering the specific type of computing power needed for generative AI, as well as other types of cloud computing needs. The necessary resources and sheer volume of data involved limit top-level AI models to the world’s largest technology companies and cloud providers – most of which are Nvidia customers. Commentary combined with the recent quarterly results from these tech giants offer some insights into the state of the AI revolution – and the evidence is clear.
For example, Microsoft (MSFT 0.99%) said it spent a lot of money in the first quarter of 2025 (ending September 30) to advance its AI agenda. The company had capital expenditure (capex) of $20 billion, which mainly went to supporting “cloud and AI-related” demand. CFO Amy Hood expects Microsoft’s spending spree to continue: “We expect capital expenditures to increase on a sequential basis given our cloud and AI demand signals,” she said.
During the day Alphabet‘S (GOOGL 0.10%) (GOOG -0.02%) CEO Sundar Pichai said of the third quarter earnings results: “Realizing (the opportunities) of AI requires…meaningful capital investments.” The company announced a $13 billion capital investment during the quarter and suggested there would be “substantial increases in capital expenditures… through 2025.”
The three major cloud providers are rounded up Amazon (AMZN 6.19%). During the Q3 call, CEO Andy Jassy called generative a “perhaps unique opportunity… we’re aggressively pursuing it.” Putting that into context, CFO Brian Olsavsky said Amazon’s investments this year would be about $75 billion, much of which would go to cloud computing and AI infrastructure. The company also said it would unveil “100 new cloud infrastructure and AI capabilities” at AWS re:Invent later this month.
Finally there is Metaplatforms (META -0.07%). Although not a cloud provider, the company’s social media sites attract 3.29 billion people every day, giving Meta vast amounts of user data. The company raised its full-year capital expenditure outlook to around $39 billion, and CFO Susan Li said: “We continue to expect significant capital expenditure growth through 2025.” She previously noted that this is “to support our AI research and product development efforts.”
Why it matters
The trend of accelerating investments to support the growing demand for AI is clear. Furthermore, much of that money will be spent on the data centers and servers required for cloud computing – where the majority of generative AI software lives. As such, Nvidia will likely be the recipient of much of this spending.
Nvidia has historically been tight-lipped about its biggest customers, but that hasn’t stopped Wall Street from doing some investigating. Analysts from Bloomberg and Barclays Research crunched the numbers and concluded that Nvidia’s four largest customers – which generate a combined 40% of revenue – are:
- Microsoft: 15%
- Metaplatforms: 13%
- Amazon: 6.2%
- Alphabet: 5.8%
Each of these companies has left no doubt about their plans to invest heavily in capital expenditures, and in particular spend heavily on infrastructure to support their cloud computing and AI ambitions. As a leading provider of data center GPUs, Nvidia will likely remain at the top of the list of beneficiaries of that spending.
Mark your calendar
Nvidia will announce its next set of quarterly results on November 20. After delivering triple-digit annualized growth for five consecutive quarters, the company has tried to rein in market expectations, suggesting that revenue growth this time will only be around 79%. While that would be a slowdown, it would at least still be notable growth.
Investors looking to make money over the next three weeks may be disappointed. No one can say for sure how Nvidia stock will react to the report, even if the company beats expectations.
As a reminder of the problems associated with short-term forecasts, investors need only look back to this summer, when Nvidia stock lost as much as 27% of its value from mid-June on fears that the next generation of Blackwell AI processors would be delayed – only to come roaring back again. It illustrated that for this stock, volatility is part of the entry price. That said, both the comments from the big tech customers and their historical spending patterns suggest that Nvidia still has strong growth ahead of it.
For investors looking for stocks they can hold for years and decades rather than weeks and months, Nvidia is a clear choice to benefit from the AI revolution. And at around 32 times next year’s earnings, it’s still attractively priced. I can’t say for sure what the stock will do between now and November 20th. What I can say – with a fair degree of confidence – is that investors Buy Nvidia stock soon and stick with it for three to five years or more, will be very glad they did.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has one disclosure policy.