Nvidia (NASDAQ: NVDA) the inventory has greatly enriched investors over the last three years, turning a $1,000 funding into over $4,500 as of this writing. Right here, the 354% jump in the company’s stock is the full story of this length, commemorating its dominant position in the lucrative human-engineered (AI) chip market.
That’s how the price determines that the chip maker’s stock is doing much better than the Nasdaq Composite‘s (NASDAQINDEX: ^IXIC) beneficial properties by 23% in the last three years. Nvidia’s prominent stock market performance has been the result of a tremendous increase in its revenue and earnings, as prospects and governments have so heavily evaluated their hands on its AI chips for the delivery and deployment of AI devices.
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Now that we’re all set to 2025, it might just be a good time to take a closer look at Nvidia’s prospects for the next three years and see if this high-flying AI stock can continue to deliver additional benefits to investors as effectively going forward.
Nvidia’s big addressable difference means it hasn’t achieved growth, but
The scale of Nvidia’s industry has grown tremendously over the past three years. The company is on track to generate fiscal year 2025 (which ends this month) revenue of $128.6 billion (calculated by adding fiscal fourth quarter revenue guidance of $37.5 billion to revenue in of the $91.1 billion it generated in the most important nine months of the twelve months).
By comparison, Nvidia ended the twelve fiscal months of 2022 (which coincided with the vast majority of 2021) with $26.9 billion in revenue. So, the chipmaker’s revenue is on track to grow at a compound annual growth rate (CAGR) of 68% over the entire plan with the help of this three-to-twelve-month length. Investors may be wondering if Nvidia can effectively replicate such a spectacular increase in revenue over the next three years.
A 68% CAGR over the next three years would bring Nvidia’s cap down to nearly $610 billion by the end of fiscal 2028. While this setup may seem extremely ambitious at first, investors can safely assume that Nvidia has a huge addressable market. different, which will certainly allow him to get the rating closer to this establishment. As an illustration, the company sees $1 trillion in revenue, which is different from my advice market.
CEO Jensen Huang claims that “every single data center of record will be able to have a GPU” in the future to allow for accelerated computing, which is achieved by means of actually educated hardware that matches the graphics cards that Nvidia sells to develop additional work in a shorter time. For this reason, accelerated computing allows users to evaluate more achievements while absorbing less power, and is expected to play a central role in keeping data center vitality consumption records in a long-travel signal.
Additionally, building the latest record data centers will be just any other long-term stock for Nvidia. McKinsey, for example, estimates that global data center capacity of record may even jump at an annual rate of 19% to 22% by 2030 to fuel the boom in generative artificial intelligence. All of this means that Nvidia’s data center business has only modest room to accelerate, excited that the company is on track to exit fiscal 2025 with actual revenue below $100 billion in the segment.
The difference of $1 trillion proposed by Nvidia means that it has reduced an actual 10% of the different supply in this apartment. In addition, the company is the leading player in the cue center GPU market, with a market share of more than 85%, indicating that the growing adoption of accelerated computing may even significantly reduce Nvidia’s data center revenue of note over the next three years.
The excellent half is that Nvidia’s boost different will not be run into the actual data services. The company’s GPUs are also old for diverse functions, corresponding to the organization of digital twins for industrial functions, powering personal computers (PCs) for gaming and AI, and in automobiles and robotics. Nvidia reported strong growth in these three segments for the rest of the quarter, generating mixed revenue of $4.2 billion. This was a 20% jump compared to the previous twelve months.
These segments may result in a quiet continuation for Nvidia. The gaming GPU market is expected to generate $49 billion in revenue between 2023 and 2028, growing at a CAGR of 21% throughout, according to TechNavia. Nvidia is a discontinued player in the gaming GPU space with a 90% market share in response to Jon Peddie’s analysis. This places the company in a pleasant station to assemble many of the incremental improvements that differ in this apartment.
Meanwhile, the digital twin market is expected to generate $110 billion in revenue in 2028, up from $10 billion in 2023. Nvidia’s GPUs are fueling the expansion of this market as they are old for organizing factory virtual devices and additionally for automating factory workflows for greater work efficiency. More than one corporation corresponds to Foxconn, Reliance, Toyotawhile others acquired digital twins of their industrial operations by introducing Nvidia GPUs.
All of this means that some of Nvidia’s overclocking drivers can even definitely help protect its spectacular acceleration over the next three years.
How strong a rally can investors highlight?
We have now established that Nvidia is certainly in a position to maintain its visible rate of revenue growth over the next three years. Once again, we’ll rely on YCharts consensus estimates to estimate the stock’s achievable growth. As the chart shows us, Nvidia’s earnings are expected to grow from $2.95 per share in fiscal 2025 to $5.59 in fiscal 2027. This contrasts with an annualized growth rate of 37% over the next two years.
NVDA EPS estimates for most modern fiscal twelve-month YCharts data records
If we strip the gap conservatively and estimate Nvidia’s earnings to grow as much as 30% in fiscal 2028, its bottom line could reach as much as $7.27 per serving. If we multiply the projected profit after three years by Nasdaq-100Earning some 33 (using the index as a proxy for tech stocks), its inventory price can reach as high as $240.
These substances, in contrast to seventy-nine percent of the beneficial properties of fresh, extend over the next three years. Given that Nvidia is now buying and selling at 32 times forward actual earnings, investors are getting a decent deal on this AI stock, suggesting they’ll be calm owners of the advice they’ll be looking for, as they appear to have room for added growth. forward.
Would you perhaps calmly make a $1000 investment in Nvidia actually now?
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Harsh Chauhan has no station in any of the shares discussed. The Motley Fool has positions and recommends Nvidia. The Motley Fool has coverage with the disclosure.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.