Nvidia stock continues to grow for investors, but is it time to lower expectations for 2025?

Shares of Nvidia (NVDA -2.32%) have doubled in each of the last two years. The stock is up 239% in 2023 and is up 170% year-to-date at the time of writing. Investors expect Nvidia to report another year of strong growth in 2025 as it upgrades its $1 trillion data center infrastructure to more advanced artificial intelligence (AI) hardware.

It might be tempting to buy the stock if you expect another year of stellar returns. But let’s take a look at where Nvidia’s data center business stands in the new year and what investors should expect from the stock.

Sales growth is starting to slow

Wall Street’s consensus estimate is for revenue to rise 51% in the coming fiscal year (ending January 2026). That’s huge growth for a company that’s expected to post $129 billion in revenue this year.

Nvidia’s launch of Blackwell, scheduled to launch in 2025, is the wild card that could provide a positive surprise. Blackwell is a complete computing platform that leverages multiple chips to deliver breakthrough performance for generative AI, quantum computing and other high-performance computing tasks.

“Demand at Blackwell is staggering, and we are committed to scaling supply to meet incredible customer demand,” CFO Colette Kress said on the company’s third quarter 2025 earnings call.

But this demand could already be reflected in analysts’ estimates. The biggest headwind for Nvidia is that Blackwell sales will face very difficult growth comparisons. Revenue increased 94% year over year in the fiscal third quarter, compared to 122% in the second quarter and 262% in the first quarter.

Where will the stock be in a year?

Kress’ commentary on near-term demand for Blackwell suggests that Nvidia is still well-positioned to see incredible demand, even if revenue growth begins to slow. AI models are getting bigger and smarter, which will require more powerful GPUs over time. However, investors should be aware of risks that could limit the stock’s gains next year.

As far as competition is concerned, Advanced micro devices (AMD -1.08%) The company is also experiencing strong growth with its Instinct graphics processing units (GPUs) for data centers. AMD’s data center segment posted 122% year-over-year revenue growth in its most recent quarter, outperforming its larger rival.

Nevertheless, the growth is not enough for AMD to capture significant market shares. Nvidia has the most robust supply chain to meet demand. It is The data center GPU business generated $30.8 billion in revenue last quarter, well above AMD’s quarterly data center revenue of $3.5 billion

A bigger risk for Nvidia investors could be slowing growth and the potential impact on valuation. The stock trades at a price-to-earnings (P/E) ratio of 54, which is consistent with the stock’s five-year trading history. However, it’s important to recognize that this premium valuation is likely based on investors’ optimistic expectations of triple-digit growth rates. Those days are probably over.

Wall Street analysts expect Nvidia’s profits to grow roughly in line with sales next year, at 50%. For example, if investors decide to cut the stock to a P/E ratio of 40 this time next year, the stock price would be $177 based on next year’s earnings estimate, representing 28% upside potential. And that P/E multiple would still represent a large premium to the average stock.

The potential for a lower P/E ratio if Nvidia’s growth slows is why I wouldn’t buy the stock if I expected another year of monster returns. It’s entirely possible that the stock will perform more modestly in 2025, so investors should only buy shares as part of a long-term investment.