Semiconductor company Nvidia reported solid financial results in the third quarter of fiscal 2025, which ended in October 2024. Revenue increased 94% to $35 billion on particularly strong sales growth in the data center segment, driven by demand for AI hardware and software. Meanwhile, non-GAAP net income increased 103% to $0.81 per diluted share.

Looking ahead, the bull case is straightforward: Nvidia graphics processing units (GPU) are the gold standard in accelerating computationally demanding data center workloads like artificial intelligence. Indeed, Forrester Research analysts recently wrote, "Nvidia sets the pace for AI infrastructure. Without Nvidia's GPU, modern AI wouldn't be possible."

The company has an important catalyst on the horizon in the launch of its Blackwell GPU, which can complete AI training tasks up to four times faster and AI inference tasks up to 30 times faster than the previous Hopper architecture. Blackwell production ramped in the current quarter, so Nvidia should see substantial revenue from its next-generation chip in the coming year.

Wall Street estimates that Nvidia's earnings will increase 50% in the next 12 months. That consensus estimate makes the current valuation of 51 times earnings look downright cheap. Nvidia stock could easily return 16% if the company reports earnings that align with expectations in the coming quarters, and shares could advance even more if it exceeds estimates.

Regardless, patient investors should feel comfortable buying a few shares today. In the previous section, I wrote that only four companies in the S&P 500 have a higher percentage of buy ratings than Amazon. Nvidia is in a similar position. Only six companies in the S&P 500 have a higher percentage of buy ratings than Nvidia, according to FactSet Research.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $358,640!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,181!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $478,206!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 30, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Apple, FactSet Research Systems, and Nvidia. The Motley Fool has a disclosure policy.

Prediction: 2 AI Stocks Will Be Worth More Than Apple Stock by the Year's End in 2025 was originally published by The Motley Fool