Nvidia (NVDA 0.05%) has been one of the most exciting companies to watch over the past few years. The artificial intelligence (AI) chip giant has seen revenue explode higher amid the AI boom as it's introduced new products, signed major deals, and offered investors a glimpse into what's next in the AI market. As a result, investors have flocked to this stock, helping the share price advance a mind-boggling 1,100% over the past three years.
Last year, Nvidia had its ups and downs -- falling amid concerns about import tariffs and later as worries about a potential AI bubble circulated, and rising as earnings continued to climb and as the company spoke of soaring demand for its Blackwell architecture. Still, the company ended the year on a bright note, with news that it would acquire the inferencing technology of start-up Groq -- this is positive since inference is expected to be a major growth driver. And the stock finished the year with a 38% gain.
Now, as we begin a new year, it's logical to wonder what's in store for Nvidia over the coming 12 months. Here are my top five predictions.
Image source: Getty Images.
1. Nvidia will be back on track in China.
One of Nvidia's biggest headwinds last year was export controls that halted chip sales to China. The company even took a billion-dollar charge earlier in the year for H20 chips that it no longer could sell there. The Chinese market is a significant one, with Nvidia chief Jensen Huang predicting that the market opportunity may total hundreds of billions of dollars just a few years down the road.
Late last year, President Donald Trump OK'd the sales of Nvidia's H200 chips -- more powerful than the H20, but less powerful than the company's Blackwell product -- to China in return for 25% of sales there. Now, the only potential question is whether China will allow the H200 to enter its market. My prediction is this won't be a significant problem. China's response was favorable, according to Trump, and demand for Nvidia products has been strong -- so I expect to see Nvidia shipping its first H200s to China early in the year.
2. Nvidia will crush the competition as the AI infrastructure spending phase unfolds.
A few months ago, Nvidia's Huang said he expects AI infrastructure spending to reach between $3 trillion and $4 trillion by the end of this decade. The increases we've seen in spending among cloud service providers and other tech giants such as Meta Platforms suggest this phase is well underway and should gain in momentum in the quarters to come.
My prediction is Nvidia will reinforce its market leadership, benefiting the most from this spending. This doesn't mean failure for other chip designers, as there is plenty of room for more than one player to generate growth. What it does mean is that AI customers still will favor buying Nvidia systems as they scale up their fleet of data centers. This is thanks to the breadth of Nvidia's AI portfolio and the strength of its chips.
NASDAQ: NVDA
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3. Nvidia will continue to partner and sign deals with others.
Nvidia last year showed that it is not only broadening its reach in AI through innovation but also by partnering with others. For example, the company signed a deal with Nokia that involves the development and use of Nvidia systems in the world of telecom. And, as I mentioned earlier, Nvidia recently said it would acquire key technology from Groq.
My prediction is we'll see more such deals in 2026, as Nvidia uses this path to strengthen its current technology and expand it into new areas.
4. Nvidia will launch its Rubin update.
This year, Nvidia will confirm that it keeps its word. I predict that, as promised, the company will ensure the annual update of its chips -- and this time we'll see this through the launch of the Rubin platform later this year.
I'm not going really far out on a limb predicting this, as Nvidia recently said the system is in full production. Still, challenges could arise, so a 2026 launch isn't necessarily a given. I'm optimistic that all will go smoothly, though, as Nvidia already has successfully rolled out both the Blackwell platform and Blackwell Ultra over the past year and a half. With this experience under its belt, Nvidia may be on track to yet another solid launch.
5. Nvidia stock will outperform the market -- but the path won't be linear.
Everything I've described so far is positive, but this doesn't mean Nvidia is immune to headwinds. Likely, some will arise in the new year -- even if it's simply a question of investors rotating into other AI stocks and not piling into Nvidia as they've done in the past. The potential for an AI bubble and concerns over high valuations throughout the market could remain challenges, too.
All of this means I don't expect Nvidia's path to be linear, but I still am optimistic about this top AI stock considering the points I've mentioned above. That's why I predict the stock will roar higher again this year and outperform the S&P 500.
