Nvidia(NASDAQ: NVDA) and Bitcoin(CRYPTO: BTC) don't have much in common, but they have been two of the best-performing investments over the last five years, obliterating the S&P 500(SNPINDEX: ^GSPC) index by several orders of magnitude:
Had you taken $10,000 and split it equally between Nvidia stock and Bitcoin exactly five years ago, it would be worth a whopping $139,000 today. The same investment in the S&P 500 would be worth just $19,306.
A series of unique tailwinds could drive further upside in both Nvidia stock and Bitcoin this year, but I think one is a better buy than the other. Read on.
Image source: Nvidia.
1. The case for Nvidia
Nvidia supplies the world's most powerful graphics processing units (GPUs) for data centers, which are used to develop artificial intelligence (AI) models. It recently started shipping its latest GB200 GPU, which is based on the new Blackwell architecture and can deliver up to 30 times more performance (in certain configurations) compared to the company's old flagship H100 chip.
But recent innovations in the AI space have triggered concerns that chip demand could collapse in the future. For instance, a China-based start-up called DeepSeek used a series of clever techniques to train its V3 and R1 AI models with a fraction of the computing power of its U.S. peers like OpenAI, and yet they deliver comparable performance in some benchmarks.
However, many of the industry's top developers are now moving away from traditional pre-training workloads, and allocating their computing capacity to test-time scaling to improve their models instead. This involves an AI model spending extra time "reasoning" or "thinking" during the inference phase before generating a response to a user's query, which means it makes better use of the knowledge it already has.
DeepSeek, OpenAI, Anthropic, Meta Platforms, and more are now focused on developing reasoning models that utilize test-time scaling. According to Nvidia CEO Jensen Huang, these models consume 100 times more compute than their predecessors, which means any drop in traditional training workloads will probably be offset by significantly higher inference workloads. As a result, Nvidia's GPUs should remain a hot product for years to come.
Nvidia recently reported its financial results for its fiscal year 2025 (ended Jan. 26), and it delivered a record $130.5 billion in revenue, which was a 114% increase from the prior year. Over $115 billion of that total came from the data center segment, which represented growth of 142%.
Meta Platforms, Alphabet, Microsoft, and Amazon are some of Nvidia's biggest clients, and they are forecast to spend over $300 billion combined on AI data center infrastructure and chips during 2025. As a result, Nvidia could be set for another big year.
2. The case for Bitcoin
Bitcoin is the world's largest cryptocurrency. In fact, its market capitalization of $1.7 trillion accounts for more than half of the total value of every token and coin in circulation across the entire industry.
Bitcoin's popularity stems from its decentralized structure, its capped supply, and its secure system of record called the blockchain. Those qualities have created the perception that it's a good store of value for investors, so much so that it's often compared to a digital version of gold. That viewpoint was somewhat validated last year when the U.S. Securities and Exchange Commission (SEC) approved dozens of Bitcoin exchange-traded funds (ETFs), giving financial advisors and institutional investors a safe and regulated way to own the cryptocurrency.
The SEC is set to become even more crypto-friendly this year. President Donald Trump appointed Mark Uyeda to run the agency until his official nominee, Paul Atkins, is confirmed by the Senate. Uyeda has already paused active legal cases against crypto giants like Binance, and since Atkins is the co-chairman of an advocacy organization called the Token Alliance, the agency is likely to be more supportive of the industry than ever before when he takes office.
Moreover, President Trump signed an executive order last week that could facilitate the creation of a Strategic Bitcoin Reserve within the U.S. government. For now, it would only hold the $18 billion worth of coins the government has previously seized from criminals, so it isn't a clear-cut fundamental tailwind for the cryptocurrency just yet. However, a strategic reserve might pave the way for the U.S. government to become a Bitcoin buyer on the open market, which would almost certainly boost its value and further legitimize its position as a store of value.
Longer term, Cathie Wood's Ark Investment Management believes many governments -- and even companies -- could hold Bitcoin on their balance sheets in the future to offset economic headwinds like inflation. It's one of eight factors Ark thinks could send the cryptocurrency to $1.48 million per coin by 2030, representing a whopping 1,560% upside from where it trades as of this writing.
Image source: Getty Images.
The verdict
Nvidia stock and Bitcoin are two fundamentally different assets. Nvidia produces real, tangible revenue and earnings, so it can be easily valued using traditional metrics like the price-to-earnings (P/E) ratio. Bitcoin doesn't produce anything, nor does it have much utility in the real world. Despite many investors considering it a store of value, just 6,935 businesses worldwide are willing to accept it as payment for goods and services.
In other words, Bitcoin is technically a speculative asset, so its true value is very hard to pin down. That's why I think Nvidia is the better buy in 2025, especially considering its current valuation.
The stock trades at a P/E ratio of 37.6 as of this writing, which is a 36% discount to its 10-year average of 59.4. Plus, Wall Street's consensus estimate (provided by Yahoo! Finance) suggests Nvidia could generate $4.50 in earnings per share during its current fiscal year 2026, placing the stock at a forward P/E ratio of just 24.6:
Simply put, Nvidia stock would have to soar 52% this year just to maintain its current P/E ratio, or by a whopping 141% to trade in line with its 10-year average. Unfortunately, we can't make similar claims for Bitcoin.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Bitcoin, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
