If 2025 taught us anything, it was the fact that uncertainty is the only constant.
Take Nvidia (NVDA 1.53%) for example. The chipmaker notched blistering gains for two successive years before its growth was stunted by uncertainty last year. A notable list of challenges faced the company in 2025, yet investors climbed a wall of worry that initially sent the stock plummeting 37%. To close out the year, however, the stock soared 38.9%, according to data provided by S&P Global Market Intelligence, more than double the 16.4% gains of the S&P 500.
Let's look at what drove the stock higher in 2025 and why there might be more to come in the year ahead.
Image source: Nvidia.
A wave of uncertainty
The bar was set high for Nvidia last year, as it had delivered back-to-back years of triple-digit growth, fueled by demand for artificial intelligence (AI). Although a deceleration of its growth was expected, it still made some investors nervous.
Moreover, some feared that the introduction of DeepSeek's R1 reasoning model would reduce demand for Nvidia's AI-centric graphics processing units (GPUs), though those concerns were unfounded. The widespread implementation of tariffs on imports raised the specter of higher prices, but investors ultimately took a "wait and see" attitude.
The ban on the sale of AI chips to customers in China was arguably the biggest hurdle. Nvidia designed its H20 AI chips to meet strict export restrictions and began selling them in 2024. However, in early 2025, the Trump Administration banned the sale of these chips to China, adding to the uncertainty.
Catalysts abound
The expected slump in demand related to tariffs and DeepSeek never materialized, and Nvidia continued to grow its revenue and profits at a healthy clip. In its fiscal 2026 third quarter (ended Oct. 26), the company reported record revenue that climbed 62% year over year to $57 billion, driving earnings per share (EPS) of $1.30 up 67%. However, Nvidia's outlook suggests that its revenue growth will accelerate, calling for Q4 revenue of $65 billion, which would represent growth of 84%.
There are reasons to believe that Nvidia can reach those lofty goals, which might even turn out to be conservative.
NASDAQ: NVDA
Key Data Points
CEO Jensen Huang gave the keynote address at CES last week, dropping the surprise announcement that Nvidia's "revolutionary" Vera Rubin -- the company's next-generation AI chips -- were already at full production, six months ahead of schedule. More importantly, Huang said Rubin would reduce AI inference costs by 90% compared to its current Blackwell chip.
Moreover, CFO Colette Kress confirmed that Nvidia's previous revenue estimate of $500 billion by the end of 2026 was too conservative, and the company would "definitely" surpass its earlier forecast.
Finally, after the Trump administration reversed course late last year, reports emerged that officials in China are on the verge of approving imports of Nvidia's H200 chips for certain customers in that country. While government, military, and other sensitive uses will be prohibited, this could be a boon to Nvidia. Huang has previously estimated that chip sales to China could hit $50 billion annually.
Nvidia defied skeptics last year by continuing its rapid growth, and 2026 could be even better. And at less than 25 times next year's expected earnings, the stock is attractively priced.
