NVIDIA (NVDA) made a fresh surge on Wall Street as William Blair initiated coverage of the stock with an Outperform rating, citing the company’s leadership in parallel computing and its dominant position in the artificial intelligence industry.
According to the company, “Nvidia (NASDAQ:) has a long and rich history of designing parallel computing systems,” which has propelled the company into high-growth markets such as gaming, automotive, and high-performance computing (HPC).
Analysts noted that Nvidia’s data center revenue rose 217% in fiscal 2024 and is expected to grow 132% in fiscal 2025, to more than $110 billion, up from just $15 billion in fiscal 2023.
William Blair explains that the key driver of NVIDIA’s growth is its system-level approach, which has expanded its total addressable market (TAM) from about $100 billion in GPUs to the broader $800 billion semiconductor and $1.6 trillion cloud services markets.
The memo highlights Nvidia’s deep software ecosystem, specifically CUDA, which has more than 5 million active developers, as well as the company’s strategic acquisitions, such as Mellanox and Cumulus, which have enhanced its capabilities in networking and systems engineering.
“The rapid rise in demand for AI solutions has driven NVIDIA’s gross profit margins to 74% in fiscal year 2024, well above its historical range of 50% to 60%,” the company says. “Part of this improvement is linked to NVIDIA’s technical proficiency — we estimate a one- to two-year lead over competitors in AI accelerator performance.”
The company also attributes this margin growth to Nvidia’s technology leadership in AI performance and its integrated systems, such as the DGX product line, which includes key intellectual property across the entire IT portfolio.
With shares trading at 30 times price-to-earnings and 32 times enterprise value-to-free cash flow based on 2025 estimates, William Blair expects further upside, citing Nvidia’s strong revenue and earnings growth. However, analysts warn that risks remain, including exposure to China, semiconductor cyclicality, and “key man risk” with CEO Jensen Huang.