Nvidia's $4 Trillion Valuation: A Deep Dive into the AI Giant's Continued Growth Potential

Think it's too late to buy Nvidia stock? These 3 charts might change your mind

Nvidia notched a market capitalization of $4 trillion on Wednesday, making it the first public company in the world to reach the milestone. Nvidia (NASDAQ: NVDA) remains one of the best artificial intelligence (AI) stocks on the market. But with the chipmaker now trading at a price-to-sales multiple of 26.4, many investors may wonder if shares have gotten too expensive to buy. Don't be fooled: Nvidia stock is still reasonably priced. Nvidia stock isn't as expensive as it seems Nvidia designs graphics processing units (GPUs) that provide the processing power required to support modern AI and machine-learning software. The company's gross margins are around 60% -- nearly twice those of competitors like Intel -- a reflection of how superior its cutting-edge chips are compared to the offerings of rivals. Nvidia can simply charge more for its products due largely to their performance superiority, as well as the value of its widely used software platform, which makes it easier for developers to program chips for specific tasks. Nvidia's hardware is essentially powering the AI revolution: Most analysts believe it has an 85% to 90% market share in AI accelerator chips right now. Because AI infrastructure spending is expected to grow by more than 30% annually through 2033, Nvidia has the potential to grow its sales base aggressively over at least the next decade, and likely beyond. Due to investors' optimism about all of this, its shares trade at a pricey 26.4 times sales. But when you measure the stock against the company's profits and bottom-line outlook, the valuation picture improves considerably. Data by YCharts. Nvidia shares currently trade at roughly 51 times earnings. That's still quite a premium. But because earnings are growing so fast, shares trade at just 36.9 times next year's earnings. If it can maintain its high gross margins, the stock's valuation could continue to improve dramatically year after year due to its rapid sales growth. Compared to a competitor like Intel, which lost money in each of the last three quarters, Nvidia's valuation looks quite reasonable. To be sure, shares aren't cheap, and the stock just hit the $4 trillion market cap threshold. But for patient investors willing to pay an up-front premium, they could still prove profitable. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you'd have $687,764!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you'd have $980,723!*

This Artificial Intelligence (AI) Stock Just Hit a New High -- and It's Still a Buy | The Motley Fool

The graphics processing and AI specialist has recently climbed to record highs. Is it too late to buy? Artificial intelligence (AI) is widely recognized as a game-changing technology, and the number of potential applications grows with each passing day. While it might seem like these advanced algorithms are everywhere, the truth is that it's still early days for the adoption of AI, which some experts contend currently stands at less than 1%. This suggests the proliferation of AI is far from over, and the opportunity ahead remains vast. Arguably, one of the biggest beneficiaries of the advent of AI has been Nvidia (NVDA 0.53%). The company invented the graphics processing units (GPUs) that facilitate this groundbreaking technology, and its chips are the top choice for AI processing. The impact has been undeniable, as the stock has gained 950% over the past three years (as of this writing), hitting a new all-time high midday on Friday. Let's take a step back and look at the opportunity, what Nvidia brings to the table, and why the stock is still a buy. Gamers have long hailed Nvidia's graphics cards as best-in-breed and the introduction of the GPU in 1999 revolutionized the gaming industry. What set its chips apart was parallel processing, or the ability to conduct a multitude of complex mathematical calculations simultaneously by allocating processing resources across the breadth of the chips' multiple cores. This turned the standard wisdom on its head, creating lifelike images in video games. Noted AI researcher and adjunct professor of AI at Stanford University, Andrew Ng, published a revolutionary research paper in 2009 that detailed the potential application of GPUs in machine learning, an earlier branch of AI. Word spread quickly, and these chips became the gold standard for processing these early, yet cutting-edge, algorithms, controlling 95% of the GPU market for machine learning. This early dominance of the market positioned Nvidia for the AI advancements to come. When generative AI made a splash back in early 2023, it was only natural that data scientists and researchers would turn to GPUs to facilitate the latest advancements in AI. The magnitude of the processing involved means that most generative AI takes place in data centers and the cloud, and Nvidia dominates the space, controlling an estimated 92% of the data center GPU market, according to IoT Analytics. The demand for data centers is experiencing explosive growth, and that trend is expected to continue over the coming decade. Data center spending is expected to balloon from $392 billion in 2025 to nearly $1.7 trillion by 2035, according to Cube Research. Given the ongoing data center buildout and Nvidia's dominant position as the de facto standard for AI processing, the company is well positioned for an AI-centric future. In recent months, all eyes have been on Nvidia's decelerating growth rate. However, it was unreasonable to expect the company to continue its triple-digit year-over-year run indefinitely, and Nvidia's current growth still runs circles around the competition. During its fiscal 2026 first quarter (ended April 27), the company generated record revenue of $44.1 billion, which soared 69% year over year. Adjusted earnings per share (EPS) of $0.81 jumped 33% -- and that was even after a $4.5 billion charge for the H20 chips developed for the Chinese market that were subject to Trump administration export controls. If not for that one-time charge, EPS would have surged 57%. Nvidia is forecasting continued robust growth. For its fiscal 2026 second quarter, the company is guiding for record revenue of $45 billion, which would represent growth of 50%. So while the days of Nvidia's triple-digit year-over-year growth may be in the rearview mirror, the company's growth is remarkable nonetheless. Given that Nvidia has recently hit a new all-time high, it's reasonable for investors to wonder if it's gotten too expensive, but the answer might be surprising. Nvidia stock is selling for roughly 38 times forward earnings as of this writing. While that's certainly a premium, consider this: Over the past five years, Nvidia has grown its revenue by more than 1,000% and its EPS by 2,940%. This has fueled stock price gains of 1,470%, which helps illustrate why a premium is justified. Furthermore, when measured using the price/earnings-to-growth ratio (PEG ratio), which factors in the company's impressive growth, Nvidia has a multiple of 0.66; any number less than 1 is the standard for an undervalued stock. The popular narrative has long been that the competition for Nvidia is ramping up, but thus far, no significant rival to its industry-leading processor has emerged. And despite the excitement, generative AI is still in its infancy, and most experts conclude that the adoption of AI will continue for at least the next decade. No one knows for sure how big the AI market will ultimately be, but even more conservative estimates are informative. The generative AI market is projected to grow to $4.8 trillion by 2033, according to the United Nations Conference on Trade and Development. Given Nvidia's dominant market position, wide adoption, attractive valuation, and the sheer magnitude of the opportunity, it's clear the company still has a long runway for growth ahead. That's why Nvidia stock is still a buy.

Nvidia Stock Is Way Cheaper Than You Think. Here's 1 Reason Why. | The Motley Fool

Nvidia (NVDA 0.53%) is one of the hottest stocks on the market today. Over the past five years, Nvidia shares have soared in value by nearly 1,500%, including another 20% in the last 12 months. Think the run is over? Think again. Nvidia stock remains far cheaper than most investors realize due to one critical factor. The artificial intelligence (AI) revolution is in full swing. But we're still in the early innings. In 2023, the United Nations estimated the global artificial intelligence market to be worth roughly $190 billion. By 2033, the organization believes the AI market's value will soar to nearly $5 trillion. That's a compound annual growth rate of more than 30%. Thus far, Nvidia's growth rates have exceeded the AI market's growth rate. Last year, Nvidia's sales more than doubled. This year, analysts expect sales to jump again by more than 50%. Why is Nvidia growing faster than the market overall? Because it rapidly gained market share due to its superior hardware and software offerings. Right now, Nvidia is estimated to have more than 90% of the AI GPU market. Its new Blackwell chips were at one time sold out for more than 12 months. Essentially every cloud computing infrastructure business on the planet is racing to buy more Nvidia products. Nvidia's CUDA developer platform, meanwhile, keeps customers locked in to its hardware and software ecosystem. In summary, through early investment, Nvidia has the best AI GPUs on the market from a performance standpoint. Its software integration, meanwhile, ensures developers are locked in to their products for the long haul. All of this has allowed Nvidia to post an industry-leading gross margin -- more than double that of competitors like Intel. While competition will emerge, Nvidia has gained a critical capital and reputational advantage -- an advantage that should persist for years to come, allowing it to charge more for its products than the competition. Trading at 27 times sales, Nvidia stock looks incredibly pricey for a $4 trillion business. On an earnings basis, shares trade at 53 times trailing earnings. Again, this looks expensive at first glance. But sales have a strong potential to grow by more than 30% per year for a decade or more. And given Nvidia's competitive advantages, profits should closely track this growth, even if margins do compress somewhat due to rising competition. On a forward earnings basis -- that is, based on what analysts expect Nvidia to earn next year -- shares trade at just 38 times 2026 earnings. That's already a much more palatable valuation. Add another two years of 30% profit growth and shares suddenly trade at just 22 times 2028 earnings. And remember, Nvidia could continue to grow at this rate through 2033 and beyond. So yes, Nvidia stock is expensive up front. But for long-term investors willing to spread that upfront premium over a long holding period, shares are surprisingly cheap. But only if you're willing to stay patient for years, or even decades at a time.

Should You Invest $10,000 in Nvidia Stock Right Now? | The Motley Fool

Nvidia (NVDA 0.53%) has been an excellent stock to own over the past few years, as the company has gained the status of having the largest market capitalization in the world. However, given the stock's impressive performance, many investors are likely wondering if there's still room for Nvidia to run. After all, the stock has risen by around 1,000% since the start of 2023. Is investing $10,000 in Nvidia right now a waste of money? Or is it a brilliant investment decision? I think the answer is clear, and there's one long-term trend that guides that conclusion. Nvidia manufactures graphics processing units (GPUs), which are specialized computing devices that can perform multiple calculations in parallel. GPUs were originally designed to process gaming graphics -- some of the most arduous workloads computers saw almost three decades ago. They excelled in this area, but quickly found other uses such as engineering simulations, cryptocurrency mining, and drug discovery. Still, their biggest use case has just emerged: AI training. GPUs can handle a wide range of workloads and process them efficiently, making them ideal for feeding various datasets to train an AI model. Additionally, GPUs can be connected in clusters to amplify computing power, a strategy that AI hyperscalers have taken to the extreme by building AI training clusters with 100,000 or more GPUs. Nvidia dominates the GPU market with a 90% market share. This dominance has enabled it to charge a premium price for its product, resulting in profits that far outpace revenue growth. This combination has enabled Nvidia's stock to soar since the AI revolution began in 2023. But is there more upside? We've yet to scratch the surface of what an AI-first business environment looks like. As a result, the AI hyperscalers are building data centers at an unprecedented rate to meet the demand. Every AI hyperscaler has announced record capital expenditures for 2025, with most of that money being allocated to data centers. Although this spending may be earmarked for 2025, building a data center is a multiyear process, so we can expect record capital expenditures to continue for the next few years. This directly aligns with a third-party market study that Nvidia cited during its 2025 GTC event, which projected global capital expenditures on data centers to rise from $400 billion in 2024 to $1 trillion by 2028. In 2024, Nvidia generated $115 billion in revenue from its data center division, which earns it a healthy slice of the data center capital expenditure pie. If Nvidia can maintain its market share within the data center space, it could generate nearly $300 billion in revenue from data centers alone. Considering that Nvidia's trailing-12-month revenue total is just shy of $150 billion, this indicates a significant amount of upside remains in Nvidia's stock. Although it has been a top performer for multiple years, Nvidia has earned that title. Additionally, there is plenty of growth left in the pipeline to continue fueling Nvidia's rise. While it is unlikely to return another 1,000% from here, I believe there is still sufficient growth potential in the data center space, allowing for market-beating returns to be achieved.

10 Reasons to Buy and Hold This AI Stock Forever | The Motley Fool

Nvidia (NVDA 0.53%) has demonstrated its ability to deliver major growth to investors, soaring 1,400% over the past five years. It's been a must-buy stock due to its leadership in a market set to reach into the trillions of dollars a few years from now; that's artificial intelligence (AI). This tech giant designs AI chips, known as graphics processing units (GPUs), that drive the most crucial of AI tasks, so they're key to the development and progress of this field. This has helped Nvidia's revenue skyrocket, and in turn, it's supercharged demand for the stock. But Nvidia's good days are far from over. In fact, this AI powerhouse is a fantastic stock to buy and hold forever. Here are 10 reasons why. More than 30 years ago, Jensen Huang founded Nvidia, and this executive with big dreams and practical paths to achieve them remains at the helm. Huang is highly focused on the company's success and has led it through a game-changing transformation, from mainly serving the video game industry with its chips to expanding across industries and into AI. That decision represented a key turning point for Nvidia, and this decision, along with others made by Huang, are the reasons the company is so successful today. And Huang's presence is reason to be confident about the future. Nvidia has delivered quarter after quarter of double- and triple-digit revenue increases, and the company has reached record levels of revenue; for example, $130 billion in the latest fiscal year. This shows us that Nvidia has staying power and has been able to keep customers flocking to it for AI chips and other products over time. This AI giant is not just generating revenue growth but also delivering high profitability on sales quarter after quarter. We can see this through gross margin, which has surpassed 70% most quarters in recent times, even during moments when expenses are high, such as during product launches. Many companies, especially in a new growth field like AI, can achieve revenue growth, but profitability is much more difficult to reach. And it's the essential element that helps a company and its investors win over the long term. So, Nvidia's profitability on sales is something to applaud. Nvidia has promised to update its chips on an annual basis, and so far, it is doing a great job of that, launching the Blackwell architecture and chip this winter and just now beginning the rollout of a new chip, the Blackwell Ultra. In fact, Nvidia has announced a roadmap out to 2028. This is important because innovation should be the element to keep Nvidia ahead of rivals. Though we all may think "AI chips" when we think "Nvidia," the company hasn't stopped here. Instead, Nvidia has designed an empire of products and services that address every step of the AI journey, from training and inferencing to developing AI agents and more. Nvidia has even launched industry-specific platforms to help healthcare or automobile companies, for instance, apply AI to their needs. All this means Nvidia can benefit from every stage of AI growth, and just about any company aiming to develop an AI platform or apply AI to its business could find what they need from Nvidia. This AI empire is Nvidia's moat, or competitive advantage, as it stands out as the only player to offer such a complete portfolio of AI. This isn't something a rival could construct overnight, and Nvidia's innovation suggests it will continue to stay one step ahead in this area. Of course, rivals still could carve out market share and be successful. However, Nvidia's moat should help it maintain dominance over time. Every company faces tough times at one point or another, and the key question is how that company will handle such situations. Nvidia has shown us its great adaptability. For example, a couple of years ago, it designed a new chip, the H20, compliant with U.S. controls on exports to China. Another more recent example can be seen when, facing the U.S. plan to impose tariffs on imports, Nvidia launched a major investment in manufacturing in the U.S. Today, Nvidia faces new controls on exports to China that have blocked sales of the H20. But the company's track record of adaptability is reason to be confident about its ability to handle this and future difficulties. Nvidia has more than $53 billion in cash, and its total assets well outweigh its liabilities. This shows that the company has what it takes to support growth and address any headwinds down the road without endangering the financial health of the business. Nvidia has made excellent investment decisions, as we can see from the company's return on invested capital over time and especially in recent years as the AI boom accelerated. So, there's reason to be confident that certain decisions or product launches today or tomorrow will deliver growth down the road. For example, Nvidia recently released a product that will make it easier for a broader range of customers to use its systems. This may seem like a small move, but it could deliver big down the road. You might expect Nvidia to be expensive, considering all the points I've mentioned above, but it's actually reasonably priced these days, trading for only 37 times forward earnings estimates. This is down from as much as 50 times just a few months ago. And that's why right now is an ideal moment to get in on this top AI stock and, for the reasons above, hold on forever.

Think Nvidia Stock Is Expensive? These 3 Charts Might Change Your Mind. | The Motley Fool

Nvidia designs graphics processing units (GPUs) that provide the processing power required to support modern AI and machine-learning software. The company's gross margins are around 60% -- nearly twice those of competitors like Intel -- a reflection of how superior its cutting-edge chips are compared to the offerings of rivals. Nvidia can simply charge more for its products due largely to their performance superiority, as well as the value of its widely used software platform, which makes it easier for developers to program chips for specific tasks. Nvidia's hardware is essentially powering the AI revolution: Most analysts believe it has an 85% to 90% market share in AI accelerator chips right now. Because AI infrastructure spending is expected to grow by more than 30% annually through 2033, Nvidia has the potential to grow its sales base aggressively over at least the next decade, and likely beyond. Due to investors' optimism about all of this, its shares trade at a pricey 26.4 times sales. But when you measure the stock against the company's profits and bottom-line outlook, the valuation picture improves considerably. Nvidia shares currently trade at roughly 51 times earnings. That's still quite a premium. But because earnings are growing so fast, shares trade at just 36.9 times next year's earnings. If it can maintain its high gross margins, the stock's valuation could continue to improve dramatically year after year due to its rapid sales growth. Compared to a competitor like Intel, which lost money in each of the last three quarters, Nvidia's valuation looks quite reasonable. To be sure, shares aren't cheap, and the stock just hit the $4 trillion market cap threshold. But for patient investors willing to pay an up-front premium, they could still prove profitable.

Will Nvidia Soar After Reaching $4 Trillion? History Offers a Strikingly Clear Answer. | The Motley Fool

Nvidia (NVDA -0.46%) just achieved something no other company ever has: It reached a market value of $4 trillion last week, pushing ahead of Microsoft and Apple. Until recent times, those tech giants periodically held the position of world's most valuable company, though they remained under the $4 trillion level. It's not too surprising that Nvidia became the first to reach this milestone, considering the growth of artificial intelligence (AI) and Nvidia's spot in the field. This tech company became a mover and shaker in the industry early on, developing graphics processing units (GPUs) specifically to handle AI workloads and launching a wide range of other related products and services too. The effort quickly bore fruit, helping Nvidia's annual revenue to surge to $130 billion from $27 billion just two years earlier. Share performance, and therefore market value, followed, with the stock advancing 1,400% over the past five years. Now, it's logical for investors to wonder what's next for Nvidia. Will the stock continue to climb after reaching $4 trillion? History offers us a strikingly clear answer. Before leaping in, though, let's zoom in on the Nvidia story so far. As mentioned, the company's focus on GPUs, or chips, and other products specifically for AI was a smart strategic decision. The AI market today is worth about $300 billion and analysts expect it to reach beyond $2 trillion just a few years down the road. Nvidia is well placed to benefit as it has cast a wide net, with the ability to sell AI products to customers across industries and at any point along their AI path. On top of this, Nvidia always has put an emphasis on innovation and excellence: It aims to consistently offer the world's top-performing chips -- and improve them on an annual basis. The company has announced its innovation plans through 2028 and now is rolling out Blackwell Ultra, the upgrade following the release of the original Blackwell this past winter. All of this has resulted in not only stellar revenue growth but also high profitability on sales as we can see through Nvidia's gross margin figures -- they generally have remained above 70%, and the company predicts this will continue. This earnings performance along with a bright outlook for the AI market has helped Nvidia shares to roar higher and reach this latest market cap milestone. Now, let's return to our question and consider whether Nvidia will advance after reaching $4 trillion. And to do this, we'll look at clues that history offers us. Nvidia has reached several market cap milestones over the past two years. They are as follows: Data source: YCharts. History suggests Nvidia could advance over the coming month as it's done after reaching market cap milestones in the recent past. And the general trend has been positive since the company reached $1 trillion in market value in June 2023. Since then, the stock has advanced about 300%. Of course, it's important to remember that history doesn't always dictate what will happen next. Stocks and the general indexes have been known to surprise investors, and any unexpected corporate or macroeconomic news could impact what direction a particular stock takes. Another key point is, though it's great to register a gain in a short time period, such as a month, what we're really interested in is holding on to stocks for the long term. You're much more likely to reap bigger rewards by choosing a quality player at a reasonable price and holding on for the long haul as its business develops. And the great news here is Nvidia makes a fantastic long-term investment, thanks to its leadership in a high-growth area, commitment to innovation, and much more. Meanwhile, if history is right, Nvidia also could roar higher in the short term after becoming the most valuable company in the world.

1 Unstoppable Stock That Could Join Nvidia, Microsoft, Apple, Amazon, and Alphabet in the $2 Trillion Club Before 2028 | The Motley Fool

This category-leading semiconductor specialist is generating strong growth thanks to artificial intelligence (AI). "The times they are a-changin'," as Bob Dylan once sang. Looking back over the past two decades, we see that a lot of what drives the U.S. economy has changed. For example, oil and industrial players were the largest companies in the U.S. in 2005 (measured by market cap), with ExxonMobil and General Electric clocking in at $392 billion and $375 billion, respectively. Now, just 20 years later, the leader board has five technology stocks with market caps of more than $2 trillion each. AI chipmaker Nvidia recently took the crown as the world's first $4 trillion company. Microsoft and Apple have each topped the list at some point, currently sporting market caps of $3.7 trillion and $3.1 trillion, respectively. Rounding out the top five are Amazon and Alphabet, worth $2.3 trillion and $2.1 trillion, respectively. With a market cap of roughly $1.3 trillion as of this writing, it seems it's only a matter of time before Broadcom (AVGO 0.48%) joins this elite group of companies. Broadcom plays a critical role in the AI ecosystem, and the prevailing secular tailwinds could help push it into the $2 trillion club sooner than you might think. Investors might be surprised to learn that Broadcom supplies a wide range of the semiconductor, software, and security solutions that underpin much of the technology in the mobile, broadband, cable, and data center spaces. The company boasts that "99% of all internet traffic crosses through some type of Broadcom technology." This highlights the company's critical role in the accelerating adoption of artificial intelligence (AI), which resides primarily in data centers and in the cloud. Broadcom's overall results show that business is robust. In the second quarter, Broadcom generated record revenue that climbed 20% year over year to $15 billion, while its adjusted earnings per share of $1.58 jumped 44%. The company added VMware to its list of bolt-on acquisitions in late 2023. Since then, management has been working to convert VMware Cloud Foundation (VCF) to a subscription licensing model and cross-selling its products to existing customers. The efforts are bearing fruit, as 87% of the company's 10,000 largest customers have adopted VCF. Furthermore, management noted that in Q2, its infrastructure software operating margin climbed to 76%, up from 60% in the year-ago quarter, and credited the "disciplined integration" of VMware for the improvement. The extensive reach of Broadcom's tech-centric products, which are critical components in the cloud and hyperscale data center industry, make it a key player in the growing adoption of AI. According to Wall Street estimates, Broadcom is expected to generate revenue of $62.74 billion in 2025, giving it a forward price-to-sales (P/S) ratio of roughly 20. If the stock's P/S remains constant, Broadcom will need to generate revenue of roughly $97 billion annually to support a $1 trillion market cap. Wall Street's expectations are bullish, guiding for revenue growth of 19% annually over the coming five years. If the company hits those targets, it could achieve a $1 trillion market cap as early as 2028. Given the expanding use cases for generative AI, those estimates could well be conservative. Furthermore, the evidence suggests Broadcom might achieve those benchmarks sooner than current forecasts suggest. Management estimates the company's serviceable addressable market for AI revenue from its three existing hyperscale customers at $60 billion to $90 billion in fiscal 2027 alone. Those estimates don't include the two new customers management announced in December -- which the company is currently being very tight-lipped about. While it will take some time to bring those new customers into the fold, Broadcom's growth will no doubt get a boost. It's still early days for the adoption of AI, and Broadcom is well positioned to benefit from these gale-force secular tailwinds. It's estimated that the generative AI market will top out at between $2.6 trillion and $4.4 trillion annually over the coming decade, according to global management consulting firm McKinsey & Company. If you include the contribution from embedded software, that number doubles. Broadcom's emergence as a key player in AI has driven the stock higher, resulting in a commensurate increase in its valuation, with the stock selling for 34 times next year's expected earnings. That said, Broadcom has soared 2,070% over the past decade, compared to just 205% gains for the S&P 500 as of this writing, which helps illustrate why the stock is deserving of a premium.

These Stocks Have Soared 700% or More in the Last 5 Years and Could Still Crush the Nasdaq by 2030

The tech sector has historically been a hotbed for monster growth stocks, and that continues to be the case as artificial intelligence (AI) takes over the global economy. It's no surprise that some of the best-performing stocks in recent years have been leading chip companies. But the investment in AI is just getting started. Nvidia (NVDA -0.46%) and Broadcom (AVGO 0.48%) continue to see robust demand for their AI products. The tech-heavy Nasdaq Composite (^IXIC 0.27%) has doubled over the last five years, but these chip stocks have significantly outpaced it and could beat it again over the next five years. 1. Nvidia Shares of Nvidia have rocketed almost 1,500% since July 2020. However, it's still growing revenue and earnings at rates that can justify more highs for the stock. After falling with the broader market earlier this year, the stock has surged to record highs. Nvidia posted a 69% year-over-year increase in revenue last quarter, driven by strong demand for its new Blackwell computing system for advanced AI workloads. "Countries around the world are recognizing AI as essential infrastructure -- just like electricity and the internet -- and Nvidia stands at the center of this profound transformation," CEO Jensen Huang said. Huang is a CEO worth betting your money on. For more than two decades, Nvidia's main business was making graphics cards for PCs and video game consoles. But Huang expanded the company's addressable market to high-performance computing markets like data centers, which today make up nearly 90% of Nvidia's revenue. Nvidia is now one of the most profitable companies in the world. Over the last year, it earned $77 billion in net income on $148 billion of revenue, representing a sky-high margin of 51%. The company is reinvesting those profits in more innovation. Nvidia is already ramping up its Nvidia GB300 NVL72 platform, which features 72 Blackwell Ultra graphics processing units (GPUs) and 36 Arm-based Nvidia Grace chips. This new Blackwell Ultra computing system was built for next-level AI reasoning, providing a 50-times jump in AI factory output. The number of chips on these systems tells you why Nvidia's margins are so high. It is packaging together a bunch of state-of-the-art chips into a single platform and selling it for a premium. Apple is reportedly set to spend $1 billion on 250 GB300 systems. Current Wall Street estimates have Nvidia's revenue and adjusted earnings growing at an annualized rate of 20% through 2030. The stock trades at a forward price-to-earnings (P/E) multiple of 38 on this year's estimate, but the P/E drops to 22 on 2030 estimates. Nvidia stock should continue to follow earnings, potentially doubling the stock within the next five years. 2. Broadcom Nvidia isn't the only way to play the growth in AI infrastructure. There's also tremendous demand for custom AI accelerators, software, networking, and security solutions, which is benefiting Broadcom. The stock rocketed 762% over the last five years. While it may not match that performance over the next five years, it could at least double. The company's revenue grew 25% year over year last quarter. AI chip revenue alone grew 77% year over year, and management's outlook calls for more growth in custom AI accelerators, or XPUs, and networking products for data centers. Broadcom is in a great position to meet growing demand for faster data transfer speeds for advanced AI workloads. Its new Tomahawk 6 Ethernet switch offers 102.4 terabits per second of capacity to improve computing performance. Moreover, Broadcom expects three existing customers for its AI XPUs to deploy 1 million accelerated clusters by 2027. This demand should continue to benefit Broadcom's profitability. Management has a long record of investing in opportunities that generate growing free cash flow. Last year, Broadcom generated $19 billion in free cash flow on $51 billion of revenue. By fiscal 2029 ending in October, analysts expect free cash flow to reach $64 billion, representing a compound growth rate of 27%. The stock is trading at 36 times this year's free-cash-flow estimate, which is justified considering the opportunity ahead. Given the insatiable demand for AI infrastructure, Nvidia and Broadcom are not likely going to experience a slowdown in demand for their cutting-edge technologies anytime soon. AI should power the chip industry to record revenues in the coming years. Based on analysts' estimates, investors can expect Broadcom stock to double by 2030.

10 Reasons to Buy Nvidia Stock Like There's No Tomorrow

It's difficult to find any companies that have benefited from the growth of artificial intelligence (AI) like Nvidia (NVDA 4.08%). The stock has been a rocket ship for shareholders, soaring 34,200% over the last 10 years. Even investors who thought they were late in 2022 would be up over 1,010% on their investment. Nvidia just became the first company to hit a $4 trillion market cap (stock price multiplied by shares outstanding), but this innovative semiconductor business still offers excellent return prospects for new investors. Here are 10 reasons you should consider adding some shares to your portfolio today. 1. AI is a generational investment opportunity Artificial intelligence could add trillions of value to the economy in the coming years. Every major cloud service provider, or hyperscaler, uses Nvidia's graphics processing units (GPUs) in their servers. Nvidia has been a leader in GPUs for 20 years, putting the company in a prime position to benefit from this opportunity. 2. Data center sales are booming Nvidia's revenue from selling chips and other products to data centers made up nearly 90% of its business last quarter, and it's still growing at robust rates. It reported $39 billion in data center sales last quarter, up 73% over the year-ago quarter. 3. Nvidia is one of the most profitable companies in the world The stock is worth $4 trillion for a good reason. Nvidia's dominance in AI chips allows it to earn very high margins. Nvidia made $77 billion in net income on $148 billion of revenue over the last year, and its net income has increased 892% over the last three years. Data by YCharts 4. Selling chips to multiple industries protects Nvidia's lead Nvidia is not just selling a chip. It offers computing platforms tailored for specific markets. Nvidia Drive is the company's autonomous vehicle training platform, which is on pace to generate over $2 billion in revenue this year. It also offers advanced computing solutions for healthcare, manufacturing, robotics, and more. It is enabling AI adoption across the global economy. 5. A growing number of AI researchers rely on Nvidia Nvidia's CUDA (compute unified device architecture) was introduced in 2006. This allowed developers to program Nvidia's GPUs to work across a number of complex computing tasks beyond playing video games and other graphics-intensive applications. There were over 5.9 million developers using Nvidia's CUDA last year, up from 4.7 million the year before, pointing to its growing AI leadership around the world. 6. Nvidia is pacing for another strong year of growth Nvidia is off to a strong start in 2025 thanks to growing demand for its new Blackwell computing system, designed for the most advanced AI workloads. Total revenue grew 69% year over year in fiscal 2026's first quarter, and current Wall Street estimates have its revenue rising 53% this year to reach $200 billion. 7. Growth in data center spending is a major tailwind Annual data center spending globally is expected to reach $1 trillion by 2029, according to Dell'Oro Group. As the leader in not just chips, but also networking hardware, Nvidia stands to capture a large portion of that spending. 8. Nvidia is plowing billions into new products Investors can see Nvidia going after a huge opportunity by looking at the rate of increase in its research and development (R&D) expense. Nvidia's R&D has doubled over the last three years to $14 billion on a trailing-12-month basis. R&D includes the spending on engineering and new products. The recent acceleration reflects the investment in Blackwell chips that are driving revenue growth right now. Nvidia has announced the next-generation Vera Rubin chips for 2026, with Rubin Ultra planned for 2027. Data by YCharts. 9. Innovation leading to more customer deals In May, the U.S. Department of Energy announced a new contract with Dell Technologies to develop a new flagship supercomputer for the National Energy Research Scientific Computing Center. The supercomputer will be powered by Nvidia's next-generation Vera Rubin platform. It will be used for molecular dynamics, high-energy physics, and AI training and inferencing. 10. Nvidia has excellent leadership CEO Jensen Huang has guided Nvidia from humble beginnings. For many years, Nvidia's GPUs were used to run graphics software and video games, but these chips are now running the most powerful computers in the world. Nvidia's market cap has grown from $4 billion in 2000 to $4.15 trillion in 2025. The stock was trading around 50 times earnings in 2000, and it's trading at the same valuation today. With analysts projecting the company's earnings to grow 29% in the next few years, investors can still buy shares and see great returns on their investment.

Where Will Nvidia Stock Be in 5 Years? | The Motley Fool

Generative AI will change the world. But Nvidia's role is less certain. With shares up more than 50% since the start of April, Nvidia's (NVDA -0.46%) stock regained momentum as generative AI technology has become mainstream. While the company's revenue growth is de-accelerating, new priorities like sovereign AI, automotive automation, and robotics could power the next leg of expansion. Let's explore how this story might play out over the next five years and beyond. On July 9, Nvidia made history by hitting a market cap of $4 trillion, making it the most valuable company in the world. Software giants like Apple, Alphabet, and Microsoft previously held this position. And Nvidia's AI-driven ascension may be a repeat of the internet-led boom that allowed these companies to overtake 20th-century leaders like General Electric and International Business Machines, or IBM, which dominated the early digital era. Generative AI's rise has become almost undeniable. And this means a lot of value will shift away from traditional companies to disruptors optimized around the new technology. For example, OpenAI's ChatGPT is already eroding demand for Google Search. And the San Francisco-based start-up expects revenue to top $125 billion by 2029 as it disrupts more industries. Investors are betting that the rise of AI will drive demand for the Nvidia chips and infrastructure needed to run and train large language models (LLMs). So far, that is happening. But the future is less clear-cut because Nvidia's clients are trying to reduce their reliance on its chips. Alphabet and Amazon are already investing heavily in their own chip design capabilities, and others could soon follow suit. According to Reuters, OpenAI aims to finalize its first custom chips this year, with mass production slated for 2026. And while Nvidia's size and popular programming platform CUDA give it a strong economic moat, investors should expect these advantages to erode over time because of the benefits companies can get by designing their own infrastructure. With a few notable exceptions, including SAP and ASML, the E.U.'s stock markets are often dominated by last-century companies like Hermes, LVMH, and L'Oreal, which specialize in low-tech industries like fashion, skincare, and makeup. The continent's domestic companies missed out on much of the 2010s software and internet boom. And the emergence of generative AI could cement its reliance on foreign tech companies, possibly introducing political and cultural incompatibilities. Nvidia aims to help solve this problem with a business vertical it calls sovereign AI, which is designed to help national governments build LLMs and AI infrastructure within their own borders. The idea has taken off in Europe. And Nvidia is working with France, Italy, and the U.K. to help their local players deploy thousands of its Blackwell chips. Sovereign AI is also booming in the Middle East, where Nvidia is working with a Saudi government-backed company, Humain, to build "AI factories" focused on physical AI solutions like robotics and automation. In a sense, Nvidia is helping foreign countries reduce their reliance on American hyperscalers, just as these hyperscalers work to replace Nvidia's chips in their business models. And while investors shouldn't expect sovereign AI to be as dynamic as free-market-led solutions, it will probably be more resistant to hostile regulation because it is public-sector-led and likely designed to address public safety concerns. The AI industry looks increasingly capable of transforming the world. And that means Nvidia will likely remain a dominant company, despite some near-term challenges. A pivot to sovereign AI could help counteract a potential slowdown in demand as more enterprise clients turn to custom chips and other forms of home-grown AI infrastructure. But while Nvidia certainly deserves its $4 trillion market cap, investors who buy the stock now may be a little late to the party. The stock's price-to-earnings (P/E) multiple of 53 (the S&P 500 has an average of 30) suggests a lot of the upside is already priced into its valuation.

Could Buying Nvidia Today Set You Up for Life? | The Motley Fool

There were likely many investors who hadn't heard of, or at least weren't familiar with, Nvidia (NVDA -0.46%) five years ago. Then came ChatGPT in late 2022, and the market rally around artificial intelligence (AI) from 2023 onward put the GPU chip company squarely on the map. Nvidia has come to dominate the market for chips used in AI data centers, unleashing life-changing investment returns in the process. Nvidia stock has returned 1,500% over just the past five years. It's rarely too late to invest in a great business, but can buying Nvidia right now still set you up for life? Here is what you need to know. AI is a bit of an arms race in the technology world. Companies are spending billions to build vast data centers housing thousands of servers and computer chips that work together to train and operate increasingly advanced AI models quickly, and at a growing scale. Nvidia dominates this market, with an estimated 92% market share. Why so high? Nvidia planted the seeds for its dominance years ago; its CUDA programming language optimizes its GPU chips, which already excel at handling heavy workloads, for AI. That one-two punch of high-end hardware and efficient software took the AI chip market by storm. Even if competitors start to make some headway, the broader AI opportunity is growing so rapidly that Nvidia continues to pile up chip sales at breakneck speed. Research from McKinsey estimates that global data center spending for AI will exceed $5 trillion over the next five years alone, as companies continue to invest in infrastructure to support a world increasingly adopting AI. That doesn't even begin to scratch the surface of adjacent AI opportunities, including those that require localized computing resources, such as humanoid robotics or autonomous vehicles. In other words, AI won't live in data centers forever. Nvidia already has its eyes on the future with hardware and software ecosystems in motion for developers across these early-stage market segments. So, while it's one thing to say that Nvidia could sustain its massive AI sales from these past several years, it's another thing to anticipate enough incremental growth on top of that to make the stock a life-changing investment from its current valuation. The company recently made headlines as the first company to attain a $4 trillion market capitalization. For a stock that has risen 1,500% over the past five years, it wouldn't seem unrealistic for Nvidia's price to double at some point. But even that would push Nvidia's value to $8 trillion. Huge numbers eventually start to succumb to gravitational effects. At $8 trillion, Nvidia would be roughly one-eighth of the total value of all U.S. stocks. It would be almost as large as the combined value of every publicly traded Chinese company, and larger than the stock market of every other country. So, when you start projecting such a large company to double, triple, or grow enough to set you up for life, the numbers quickly go to eye-popping levels. To be clear, Nvidia's business doesn't appear to have peaked, and there could easily be some solid investment upside left. Shares still trade at roughly 39 times 2025 earnings estimates, which is a reasonable valuation for a company that analysts anticipate will grow earnings by an average of 28% annually over the next three to five years. That said, Nvidia is likely too large now to replicate its past investment returns. Low-double-digit annualized returns seem more realistic, making Nvidia a fantastic addition to a diversified portfolio, just not the life-altering stock it has been to this point.

Could Investing $10,000 in Nvidia Make You a Millionaire? | The Motley Fool

Nvidia (NVDA 4.08%) made big news last week when it became the first company ever to reach a $4 trillion market cap. Although investors were worried about it earlier this year due to competition and tariffs, savvy investors saw its plunge as an incredible opportunity, and they've been proven right already. At its incredible highs today, can investing in Nvidia stock still make you a millionaire? Nvidia soared to the top of the market due to its best-in-class graphics processing units (GPU) that make generative artificial intelligence (AI) work. It's been around for decades, but its products have been used mostly for the gaming industry. This new opportunity is much greater, and demand has been through the roof. Nvidia stock is up 1,000% over the past three years. According to Statista, the AI opportunity is going to increase at a compound annual growth rate of 26.6% over the next five years. Nvidia may benefit from that expansion more than any other company. It has between 90% and 95% of the market for AI chips, and even though it's facing increasing competition, the largest and most lucrative contracts are ending up on its platform because it has powerful capabilities that are unmatched in the chip market. It's not satisfied with leaving it that way, though, and it's in the process of creating and launching ever more powerful chips to drive further generative AI capabilities and higher growth. Its Blackwell architecture was launched last year, and it's already in the process of launching the next level of chips called Blackwell Ultra, with its first contract under way with CoreWeave. It's also an investor in CoreWeave, which offers cloud solutions for generative AI. Nvidia has tremendous opportunities in data centers and AI factories, which large-language models (LLM) need to crunch the huge loads of data necessary to make generative AI work. Data center revenue increased 73% year over year in the 2026 fiscal first quarter (ended April 26), outpacing total revenue growth of 69%, and the demand is exploding. There were 100 Nvidia-powered AI factories in the first quarter, double the amount last year, with the average number of Nvidia chips in the data centers also double the number of chips used last year. Nvidia is also incredibly profitable. It sports a 52% profit margin as of the first quarter, and Wall Street is looking for earnings per share of $4.29 in fiscal 2026, up from $2.99 last year. Even if we've established that Nvidia is a top growth company, that doesn't necessarily mean it can make you a millionaire. Of course, it depends on what you start with, and half a million dollars might make you a millionaire over a few years. However, considering its $4 trillion value and slowing growth, the road to millionaire status might not lead through Nvidia stock for the average investor, even if you have $10,000 to invest. Turning $10,000 in $1 million implies 10,000% growth. Imagine $4 trillion increasing 10,000% and it becomes clear that this isn't something realistic for Nvidia stock. If you're looking for the next Nvidia, Nvidia isn't going to be it. But it's a safe bet for growth over time, and it could reach $5 trillion soon. The stock price could reach $200 before the year is out, a 21% gain over today's price, implying a market cap of $4.8 trillion by the end of 2025. It's a winning stock that could be a valuable addition to a diversified portfolio.