Nvidia stock jumped nearly 200% this year. Here’s what could happen in 2025

If we try to summarize the performance of the global stock market for 2024, it is difficult to ignore Nvidia (NASDAQ:NVDA) stock. The share price has risen 191% this year, bringing the market cap to a staggering $3.43trn. The focus turns to 2025, when all eyes will be on the company to help keep the good market sentiment going. Here’s what I think could happen next year.

High benchmark

During the release of quarterly results for the whole year, Nvidia managed to beat analyst expectations. However, as the year progressed, the size – percentage wise – of the overperformance decreased as the company continued to grow. As I flagged in November when the latest results came out, annual Q3 revenue growth was 94%. Revenue growth in the last quarter compared to the comparable period of 2023 was 122%. The previous quarter was up 262% and the year before that was up 265%.

In 2025, I expect that growth compared to the previous year will continue to decrease. There is nothing wrong with this in theory, as it is very difficult to grow by three-digit percentages given how big a company is. However, the expected growth rate is likely to remain very high. Therefore, I think we may see a much lower share price rally next year, as some investors are disappointed by the slow pace of growth.

A rally in progress

Even though the share price gains may be lower this year, I still expect a good return for Nvidia stock. This is because the Blackwell chip, the largest GPU (graphics processing unit) ever built, revealed this year and started shipping in Q4. Therefore, the net sales profit should only be reflected in the quarterly results next year.

In addition, the use of AI in Nvidia products is still growing. It’s not like we’ve reached peak capabilities or even peak adoption of AI across all sectors. So I think it’s likely that investor excitement around AI stocks will continue to be a key theme for much of the coming year. This should help keep Nvidia shares supported, as any dip could be quickly bought.

Assembling the jigsaw

So if I believe a stock will struggle to impress investors but will be buoyed by the continued excitement of AI, what should I do?

My preference is to look at other stocks that may benefit from this investor optimism in the sector. For example, Broadcom. The semiconductor company is up 120% this year, but 45% of that move came last month. I think some investors see Broadcom’s application integrated circuits (ASICs) as a viable option for custom AI processors. As a result, I feel this stock may have more buzz around it than Nvidia going forward.

I’m not completely against buying Nvidia shares, but I feel there are better options out there with more leverage. That is why, in my portfolio, I am looking for good options in the same sector that can have a time to shine in 2025.