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• Nvidia stock has risen 755% since 2022 and 171% in 2024 due to AI spending
• Fund manager Chris Versace maintains $175 price target despite margin pressure from Blackwell chip production
• Nvidia’s gross margin is declining: from 78.4% in Q1 2025 to projected 70.6% in Q1 2026
• Competition is increasing from AMD, Huawei, and in-house chip development by major tech companies
• Despite challenges, AI market potential remains significant with PwC forecasting $15.7 trillion added to global economy by 2030

Nvidia’s (NVDA) stock has been on a remarkable journey since the advent of generative AI, rising 755% since 2022 and 171% in 2024 alone. The company that once focused primarily on gaming graphics has transformed into the backbone of the artificial intelligence revolution.
With its latest quarterly earnings report, however, signs of pressure are emerging. The company’s gross margins are slowly declining, prompting questions about whether Nvidia’s meteoric rise might be cooling.
Nvidia’s success stems from the AI spending frenzy kicked off by OpenAI’s ChatGPT. The company’s specialized graphics processing units (GPUs) have become essential tools for training and operating large language models.
These chips are perfectly suited for AI’s intense workloads. They perform better than traditional central processing units (CPUs) that were previously common in enterprise and cloud networks.
The numbers tell the story. Nvidia’s annual revenue has skyrocketed to over $130 billion, up 114% year-over-year from $27 billion in 2023. Meanwhile, net income has jumped to nearly $73 billion from less than $5 billion in 2023.
 

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NVIDIA Corporation (NVDA)

Demand for Nvidia’s AI chips comes from across the globe. Companies are rushing to implement AI solutions across industries. Militaries are researching battlefield applications, banks like JP Morgan Chase use it for risk management, and retailers are testing it to reduce theft and improve supply chains.

This demand hasn’t been cheap for buyers. Nvidia’s H100 chips have commanded prices up to $40,000 each, while its newer Blackwell chips sell for $30,000 to $40,000 per unit. By comparison, competitor AMD sells its Instinct MI300X AI chips for $10,000 to $15,000 each.

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