This article was updated on Feb. 25, 2018, and originally published on Aug. 29, 2017.

NVIDIA (NASDAQ:NVDA) shares surged more than 140% over the past 12 months as robust sales of its GPUs and Tegra CPUs fueled a streak of big earnings beats. NVIDIA posted double-digit annual sales growth over the past nine quarters, and analysts expect its revenue and earnings to respectively rise 28% and 35% in 2018.

But looking further ahead, NVIDIA's growth looks less certain. Its revenue and earnings are expected to rise 15% and 16% next year, respectively, as certain tailwinds fade and its headwinds strengthen. Let's discuss those challenges, and how they could alter NVIDIA's path over the following year.

NVIDIA CEO Jensen Huang.

NVIDIA CEO Jensen Huang. Source: NVIDIA.

The best-case scenario for NVIDIA

Let's first examine a best-case scenario for NVIDIA, in which everything goes right for its GPU and Tegra CPU businesses. In this rosy future, NVIDIA's current-gen Pascal GPUs will continue holding their ground against AMD's (NASDAQ:AMD) new Vega chips, and its next-gen Volta GPUs (which will launch later this year) will crush AMD's next-gen "Vega 2.0" chips.

AMD was expected to offer its new Vega-based Radeon RX 64 and 56 chips at lower prices than NVIDIA's comparable Pascal-based GTX 1070 and 1080 GPUs, but they were eventually launched at comparable prices. Therefore, without a clear cost advantage (which has usually been AMD's strength), NVIDIA could keep dominating the low-end and high-end gaming GPU markets with its wide range of GeForce cards.

NVIDIA's "Roborace" vehicle.

Source: NVIDIA.

NVIDIA would also benefit if Qualcomm's (NASDAQ:QCOM) planned merger with NXP Semiconductors (NASDAQ:NXPI) is delayed or blocked. That deal would make Qualcomm the biggest automotive chipmaker in the world, and the chipmaker would likely use NXP's BlueBox autonomous driving platform to challenge NVIDIA's similar Drive PX platform.

Qualcomm could also use NXP's automotive reach to sell more Snapdragon Automotive chips for connected cars -- which could harm NVIDIA's Tegra business. So a hobbled Qualcomm would also give NVIDIA time to seal more driverless deals across the industry.

Meanwhile, in this best-case scenario, sales of NVIDIA's high-end data center GPUs would keep rising as companies install more GPUs for machine learning applications. Large companies looking to cut costs would also likely take a closer look at its new DGX-1 supercomputer, which puts "400 servers" into a single box powered by eight Tesla V100 GPUs and two 20-core Intel (NASDAQ:INTC) Xeon E5-2698 processors.

Lastly, rising sales of Nintendo's (OTC:NTDOY) Switch, which is powered by NVIDIA's Tegra SoC, could offset any softness in Tegra sales to automakers. NVIDIA recently announced that Switch sales "contributed to" its 75% year-over-year jump in Tegra sales during the fourth quarter.

The worst-case scenario for NVIDIA

However, a lot could also go wrong over the next few quarters. First, sales of gaming PCs -- which escaped the overall slowdown in PC sales -- could decline as gamers finish upgrading their systems. Many current-gen games are ultimately limited by console hardware, which could limit demand for high-end gaming rigs.

Meanwhile, cryptocurrency miners are causing an ongoing shortage of NVIDIA's high-end GPUs. The inflated prices of resold GPUs are alienating NVIDIA's core gaming customers, and if the cryptocurrency "bubble" pops, the market could be flooded with cheaper used GPUs which would throttle demand for NVIDIA's new GPUs.

Rows of servers in a data center.

Source: Getty Images.

AMD's first round of Vega chips didn't seem to threaten NVIDIA's Pascal last year, but its "Vega 2.0" chips might land some surprising blows, just as AMD's Ryzen CPUs did against Intel's current-gen Kaby Lake CPUs.

AMD's new APUs, which combine a CPU and a GPU in a single chipset, could harm both NVIDIA and Intel. Meanwhile, Intel's plans to enter the discrete GPU market could hurt NVIDIA and AMD.

As for data centers, Intel is striking back against NVIDIA with its "Knights Landing" Xeon CPUs, which aim to reduce the use of stand-alone GPUs for machine learning purposes. Intel believes that it can do this by pairing its Xeons with programmable chips called FPGAs (field-programmable gate arrays).

Meanwhile, Qualcomm could finally close its NXP acquisition and immediately bundle Snapdragon Automotive chips and BlueBox systems together for automakers. Sales of the Nintendo Switch could wane, enabling AMD to retain control of the console market with SoCs for the PS4 and Xbox One. If all these things happen, NVIDIA's growth would certainly decelerate.

What I think will happen...

I think NVIDIA's wide range of chipsets and energy-efficient designs can hold off AMD in the gaming GPU market, but I'm less confident about its future in cars and data centers. Qualcomm's acquisition of NXP will be a game changer for the automotive industry, if it happens, and Intel's renewed focus on machine learning could throttle demand for its data center GPUs.

Therefore, I expect NVIDIA to climb higher over the following year on the strength of its gaming GPUs, but I doubt that it can repeat its triple-digit gains. The stock already looks pricey at 51 times earnings, which is much higher than the industry average of 37 for semiconductor makers, and its meager forward yield of 0.3% won't attract any income investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.