Nvidia(NASDAQ: NVDA) stock and Bitcoin(CRYPTO: BTC) are completely different assets, but they have one thing in common: They are the top dogs in their respective markets.
Nvidia has a market capitalization of $3.5 trillion, making it the world's largest semiconductor company by a country mile. It's the leading supplier of data center chips used to process artificial intelligence (AI) workloads, and sales are booming right now.
Bitcoin has a market capitalization of almost $2 trillion, making it the world's largest cryptocurrency by a wide margin.
Nvidia stock soared by 171% in 2024, and Bitcoin was up by 120%. Both ended the year near record highs. But 2025 has arrived, and it's time for investors to look forward, so which one is the better buy for this year?
Image source: Getty Images.
The case for Nvidia
Nvidia's H100 graphics processing unit (GPU) was the most popular data center chip in the world for AI development in 2023, helping the company win 98% of the entire market. It then launched the more powerful H200 GPU during 2024, and it also started shipping an entirely new generation of chips built on its Blackwell architecture toward the end of the year.
The Blackwell-based GB200 NVL72 GPU system is capable of performing AI inference (using live data to make predictions) at 30 times the pace of the equivalent H100 system. Each GB200 GPU sells for about $83,000, which is twice the price of the H100, but the 30-fold increase in performance actually translates into substantial cost savings for developers.
Simply put, Blackwell GPUs will make the most advanced AI models affordable for a wider group of businesses and developers. So it isn't surprising that Nvidia Chief Executive Officer Jensen Huang says demand is "staggering." The company shipped 13,000 sample GB200 GPUs during its recent fiscal 2025 third quarter (ended Oct. 28), but one estimate by Morgan Stanley suggests it could ship 800,000 during the first three months of calendar 2025 alone.
In a separate forecast, Morgan Stanley also said four tech companies -- Microsoft, Amazon, Alphabet, and Meta Platforms -- could spend a combined $300 billion on AI infrastructure and chips during 2025. As the market leader in AI chips, much of that money will likely flow to Nvidia.
Its fiscal year 2025 will wrap up at the end of this month, and the company is on track to deliver a record $128.6 billion in total revenue, led by GPU sales. That would represent growth of 111% compared to fiscal 2023. Wall Street's average forecast (provided by Yahoo!) suggests the chipmaker's revenue will then approach $200 billion in fiscal 2026 (which will occupy most of calendar year 2025).
By all accounts, the next 12 months will be huge for Nvidia. But would you believe me if I told you its stock still looks cheap? More on that in a moment.
The case for Bitcoin
Bitcoin recently crossed a historic price milestone of $100,000, and as I mentioned earlier, it currently has a market cap of almost $2 trillion. The next-most valuable cryptocurrency is Ethereum, with a market cap of just $422 billion, which really highlights Bitcoin's dominance.
Why is it so popular? Truth be told, few cryptocurrencies have a true use case in the real world. They are mostly speculative assets that rise and fall on the whims of investors.
But Bitcoin is unique because it's truly decentralized, meaning it isn't controlled by any company or person. It also has a fixed supply of 21 million coins, which adds an element of scarcity, especially because the total amount won't be fully mined until about the year 2140.
Last year, the Securities and Exchange Commission (SEC) approved dozens of Bitcoin exchange-traded funds (ETFs). It became the first cryptocurrency to win the blessing of the U.S. regulator, while other crypto heavyweights remained under intense scrutiny, and its decentralized nature had a lot to do with it.
ETFs allow financial advisors and institutions to own Bitcoin in a safe and regulated manner, which is great because many investors and analysts have embraced the cryptocurrency as a store of value, akin to a digital version of gold.
The total value of all gold reserves currently stands at $17.9 trillion, so Bitcoin's market cap would have to soar by about 840% to catch up, implying a price per coin of $904,000.
That might be a good long-term target for investors to shoot for. In the nearer term, Fundstrat Global Advisors analyst Tom Lee predicts Bitcoin could reach $250,000 in 2025.
It could benefit from further interest rate cuts this year, which tend to drive investors into growth assets like stocks and cryptocurrencies. Plus, a new administration will take office this month, and it will feature several pro-crypto members, including the president himself. That could buoy demand for cryptocurrencies in general.
The verdict
There is a very important difference between a company like Nvidia, and a speculative asset like Bitcoin: Companies generate revenue and earnings, so it's easy to calculate their value.
Nvidia generated $2.62 in earnings per share (EPS) during the past four quarters, giving its stock at a price-to-earnings ratio (P/E) of more than 56. That's a slight discount to its average P/E of about 59 during the past 10 years, so we can argue that the stock is somewhat cheap right now.
Moreover, according to Wall Street's consensus forecast (provided by Yahoo!), the company could generate $4.43 in earnings per share during its fiscal year 2026 (which starts in February). That places its stock at a forward P/E of about 32, as represented by the orange line in the chart below:
In other words, Nvidia stock would have to soar by 89% during the next 12 months just to trade in line with its 10-year average P/E of almost 59.
Despite Bitcoin's status as the world's largest cryptocurrency, there isn't a concrete reason for it to move higher this year. I'm not saying it won't, I'm merely pointing out that it's impossible to forecast the price movements of a speculative asset. There isn't even a reliable way to calculate how much value Bitcoin could gain from a tailwind like favorable regulation under the new administration.
Therefore, I think Nvidia stock is the better buy in 2025. Aside from its attractive valuation, AI could be the most powerful tech revolution in a generation, and it wouldn't be happening without Nvidia.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. 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. 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, Ethereum, 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.
