Nvidia's $1.5 Trillion Rally: Investors Bet on Continued Growth Amid AI Boom

Nvidia's $1.5 trillion rally has traders primed for more

Gift 5 articles to anyone you choose each month when you subscribe. Nvidia shares have staged a $US1 trillion ($1.5 trillion) rebound in two months -- and investors are betting the rally has further to go as fears about the chipmaker give way to optimism. Last week's earnings report assuaged some key investor concerns: particularly whether US restrictions on the sales of advanced semiconductors in China would derail Nvidia's rapid revenue growth as well as the outlook for artificial intelligence spending, and the firm's ability to expand supply of its newest Blackwell chips.

Nvidia's $1 trillion rally has traders primed to ramp back up

Nvidia shares have staged a $1 trillion rebound in two months -- and investors are betting the rally has further to go as fears about the chipmaker give way to optimism. Last week's earnings report assuaged some key investor concerns: particularly whether US restrictions on the sales of advanced semiconductors in China would derail Nvidia's rapid revenue growth as well as the outlook for artificial intelligence spending, and the firm's ability to expand supply of its newest Blackwell chips. "Those questions have been answered in the positive for Nvidia," said Thomas Martin, senior portfolio manager at Globalt Investments. "It's time to ramp back up your ownership." After soaring for two and a half years amid insatiable demand for its chips used in AI computing, Nvidia shares tumbled in the first few months of 2025 on concerns about President Donald Trump's trade policies and a potential pullback in spending by its biggest customers. Nvidia rose 0.9% on Tuesday, and since an April low, the stock has rallied more than 45%, pushing Nvidia's market value to $3.4 trillion. That's just shy of Microsoft the world's most valuable company. Nvidia shares remain 7% below a record high in January. Despite the big advance, Nvidia trades at roughly 29 times profits projected over the next 12 months, well below the average over the past decade at 34 times. By contrast, the Nasdaq 100 is priced at 26 times despite Wall Street estimates calling for revenue growth this year that's a fraction of Nvidia's. The stock's PEG ratio -- a measure of valuation relative to growth -- is under 0.9, by far the lowest among the Magnificent Seven, which also includes Apple Inc., Amazon, Alphabet, Tesla and Meta Platforms. Of course, Nvidia is still exposed to US tariffs given its chips are manufactured overseas and could be hurt by a deterioration in trade relations with China, a country that accounted for 13% of revenue in the first quarter. However, purchase agreements with governments in the Middle East are seen as offsetting some lost sales and Nvidia's product pipeline is expected to keep competitors at bay. Microsoft, Meta, Alphabet, and Amazon, which together comprise more than 40% of Nvidia's revenue, continue to invest aggressively in AI infrastructure. Capital expenditures for the four companies are projected to reach roughly $330 billion in 2026, up 6% from estimated spending this year, according to the average of analyst estimates compiled by Bloomberg. Amazon's cloud services chief on Friday reiterated the company's plan to aggressively expand its data centers. "We just haven't seen any kind of slowdown in AI spending, and so long as capex keeps moving up, we're unlikely to see the cycle roll over or Nvidia experience much compression to its multiple," said Samuel Rines, a macro strategist at WisdomTree. Nvidia is undervalued, according to Rines, who argues the ratio of price-to-projected earnings for the stock could rise to the high 30s or low 40s. Analysts are widely bullish on Nvidia. Of the 78 covering the stock, eight have hold ratings and only one says sell. The average price target sits at around $170, which would represent a gain of 24% from Monday's closing price, according to data compiled by Bloomberg. Despite its popularity on Wall Street, the stock remains under-owned by market professionals relative to other Big Tech peers, suggesting the potential for more buying in the weeks to come. Nvidia is owned by 74% of long-only funds, according to data from Bank of America published on Friday. This puts it behind Amazon, Apple, and Microsoft, which is the most owned at 91%. The relatively low exposure coupled with demand for more computing infrastructure is likely to drive Nvidia shares higher into 2026, according to Angelo Zino, senior equity analyst at CFRA Research. "There were a lot of investors that really got out of this market prematurely and now they're kind of being forced back into it," Zino said.

Why Nvidia Rallied More Than 24% in May | The Motley Fool

While Nvidia reported an earnings beat late in the month, that post-earnings gain only amounted to a small portion of May's gain. Before the earnings release, Nvidia, like many technology stocks, rallied in a big way when tariff tensions eased in mid-May, after the U.S. and China announced a détente in their trade dispute, paving the way for talks. Around that time, the Trump administration also made deals for significant AI chip sales to the United Arab Emirates and Saudi Arabia. Like many technology and semiconductor stocks, Nvidia rallied in a big way after May 12, when U.S. and China agreed to ratchet down their tariffs on each other. The U.S. lowered its tariffs on Chinese goods from 145% to just 30%, which incorporates the 10% universal tariff and extra 20% tariff meant to penalize China for the flow of fentanyl to the United States. Nvidia, like most stocks, especially technology stocks, rallied on the news, as these stocks had still yet to fully recover after the post-"Liberation Day" stock market crash on April 2. The immediate "relief rally" was soon followed by the announcement of large AI deals the Trump administration struck with both Saudi Arabia and the UAE. In Saudi Arabia, Humain, a division of the Saudi Arabia Public Investment Fund, will build a 500 MW AI cluster, composed of "several hundred thousand" Nvidia GPUs, which will be deployed over the next several years. In addition, a deal was soon reached with the UAE's G42, whereby Nvidia will be able to ship 500,000 Nvidia chips, starting this year. These big deals in the Middle East probably boosted Nvidia's growth expectations, as the current administration also officially nixed the Biden administration's "AI diffusion rule." That rule was supposed to go into effect May 15 and was to limit AI chip sales to certain countries depending on their friendliness to the U.S., as well as the potential for chips to be smuggled to adversaries such as China. Yet while the administration relaxed chip sales to countries such as the UAE and Saudi Arabia, it erected even stronger barriers to China. In April, the Trump administration banned the sale of Nvidia's H20 chip to China, which was a modified version of Hopper deemed appropriate for the Chinese market. But without guidelines for a replacement, Nvidia had to take a $5.5 billion inventory charge to its H20 inventory. Despite the Hopper limitation, Nvidia was still able to beat expectations for its fiscal first quarter ending in April and reported on May 28. In the quarter, revenue grew 69% to $44.1 billion, with adjusted (non-GAAP) earnings per share up 33% to $0.81. The lower profit growth was due to the H20 writedown, but Nvidia was able to beat expectations anyway. All in all, the results seemed to reassure investors that the company should be able to manage geopolitical tensions, and that its supply issues ramping the new Blackwell chip have largely been resolved. After May's recovery, Nvidia trades at 44 times earnings and 31 times forward earnings. That's a reasonable multiple if Nvidia can maintain its dominance in AI systems and find a way to regain some of its lost China revenue. This year, all eyes will be on the company's new Blackwell chip, as well as how Nvidia's customers innovate new and exciting AI use cases. On the risk side, investors should watch for newer custom AI chips designed in-house by the cloud giants, which could continue to take share. While Nvidia is currently the dominant standard in neutral GPUs that work for a variety of uses cases, the emergence of custom chips that can run workloads at much lower prices could eventually slow down Nvidia's torrid growth. So with Nvidia's stock now back closer to all-time highs, the risk-reward is more balanced today.

Jensen Huang Just Delivered Incredible News for Nvidia Stock Investors | The Motley Fool

Nvidia (NVDA -1.44%) is the world's leading supplier of graphics processing units (GPUs) for data centers, which are the key pieces of hardware for developing artificial intelligence (AI). Since the beginning of 2023, Nvidia's market value has grown by an eye-popping $3 trillion thanks to soaring demand for those chips, but the company is just getting warmed up. Every new generation of AI model so far has required significantly more computing capacity than the last, which is a major tailwind for Nvidia's hardware sales. During a recent conference call where management discussed the company's results for the fiscal 2026 first quarter (ended April 27), CEO Jensen Huang made a series of comments about future demand that should be music to investors' ears. Nvidia stock looks attractive right now relative to its history, so here's why it could be a great buy on the back of Huang's latest remarks. Nvidia's H100 GPU, which was built on the company's Hopper architecture, was the top-selling data center chip for AI development during 2023 and for most of 2024. It was designed for both training and inference workloads; training is when developers feed mountains of data into AI models to make them "smarter," and inference is the process by which AI models turn that data into responses for the end user. In 2023 and 2024, AI chatbot applications were great at generating one-shot responses, meaning they prioritized speed when compiling information and feeding it to the end user. Those applications were revolutionary at the time, but the underlying large language models (LLMs) occasionally made mistakes or provided incomplete answers. In 2025, next-generation "reasoning" models are solving that problem by autonomously cleaning up errors in the background before rendering responses. To put it another way, they spend time thinking to ensure the information they provide is as accurate as possible. This comes with a downside -- reasoning models take longer to generate answers, and they require significantly more computing capacity than their predecessors. Nvidia designed a new architecture called Blackwell to power those inference workloads, and it produces up to 40 times more performance than the Hopper architecture. But it might not be enough, because Huang says some reasoning models consume a staggering 1,000 times more tokens (words, punctuation, and symbols) than the old one-shot LLMs. Huang says the Blackwell-based GB200 GPU NVLink 72 is the best system on the market for reasoning inference workloads right now, but Nvidia is also gearing up to ship its new Blackwell Ultra GB300 GPUs this year, which will offer even more performance. Hardware needs to keep getting better; otherwise, reasoning models will take too long to generate responses, and people simply won't use them anymore. Nvidia's data center business generated $39.1 billion in revenue during the fiscal 2026 first quarter, a 73% increase from the year-ago period. It now accounts for 89% of the company's total revenue, so it's the main point of focus for investors. At Nvidia's GTC conference in March, Huang told the audience that AI infrastructure spending will keep growing and could surpass $1 trillion annually by 2028, thanks to the incredible demand for inference computing capacity from reasoning models. Then, in his conference call with investors for the fiscal 2026 first quarter, he said Nvidia is on track to fill "most" of that demand, so the company's data center revenue probably still has room to soar. Nvidia's hardware remains leaps and bounds ahead of the competition. Plus, it isn't just about chips -- the company has the entire stack covered, selling networking equipment and even a software platform called CUDA, which developers can use to optimize GPUs for specific tasks. Once data center operators are locked into the Nvidia ecosystem, it becomes very inconvenient (and expensive) to switch. Based on Nvidia's $3.19 in trailing-12-month earnings per share (EPS), its stock is trading at a price-to-earnings (P/E) ratio of 44.3. That's a 26% discount to its 10-year average of 59.8, suggesting it's undervalued right now. Plus, Wall Street's consensus estimate (provided by Yahoo! Finance) suggests Nvidia will generate $4.28 in EPS for the whole of fiscal 2026, placing its stock at a forward P/E ratio of just 32.1. In other words, Nvidia stock would have to soar by 38% over the next year or so just to maintain its current P/E ratio, or by 86% for its P/E ratio to trade in line with its 10-year average, assuming Wall Street's EPS forecast proves to be accurate. However, investors should stay focused on the longer term, because if Jensen Huang is right about where inference demand and data center spending are headed, Nvidia's stock could be orders of magnitude higher than where it is today.

Will $50,000 Invested in Nvidia Stock Be Worth $1 Million in 10 Years? | The Motley Fool

Nvidia (NVDA 1.26%) has been a cornerstone of the artificial intelligence (AI) trade for several years. Its share price has increased 850% since January 2023, a period that roughly coincides with the launch of ChatGPT. But Wall Street is still overwhelmingly bullish on the semiconductor company. Angelo Zino at CFRA Research thinks Nvidia "will be the most important company to our civilization over the next decade." More broadly, among 73 analysts following Nvidia, the median 12-month target price is $175 per share. That implies 25% upside from its current share price of $140. Could Nvidia stock turn $50,000 into $1 million over the next decade? Here are my thoughts. What sets Nvidia apart is vertical integration. The company has over 90% market share in data center graphics processing units (GPUs), chips that accelerate complex workloads such as artificial intelligence (AI). But the company supplements its GPUs with adjacent hardware like CPUs, interconnects, and networking equipment. Nvidia also develops software products. AI Enterprise is a suite of tools, code libraries, and pretrained models that streamline the development of AI applications for use cases like autonomous robots, conversational agents, and optimization systems. CrowdStrike uses those tools to power threat detection capabilities on its cybersecurity platform. Similarly, Omniverse is a software platform that supports 3D application development. It also serves as a simulation engine that lets engineers generate synthetic data for developing machine learning models. Amazon uses the Omniverse platform to optimize warehouse design and train fulfillment center robots. Nvidia frequently sets performance records at the MLPerf benchmarks, objective tests that evaluate AI systems on training and inference workloads. That is an important competitive advantage: Nvidia builds the best AI accelerators on the market. But vertical integration reinforces that advantage by letting the company design entire data center systems with the "lowest total cost of ownership," according to CEO Jensen Huang. Grand View Research says spending on AI hardware, software, and services will increase at 35.9% annually through 2030. Nvidia has a good shot at matching that growth rate. Indeed, Wall Street expects earnings to grow at 40% annually through the fiscal year ending January 2027. That makes the current valuation of 44 times earnings seem fair. Nvidia shares would need to increase 1,900% (20-fold) in the next decade to turn $50,000 into $1 million. Returns of that magnitude are theoretically possible in that time frame. In fact, seven stocks currently in S&P 500 (^GSPC 1.03%) hit that mark in the last decade, as listed: However, while 20-fold returns are theoretically possible, Nvidia has virtually no chance of hitting that mark in the next decade. The company is already worth $3.4 trillion, meaning its market value would hit $68 trillion if the stock increased 20 times. That seems highly unlikely when the entire S&P 500 is only worth $48 trillion today. Nevertheless, Nvidia is still a worthwhile investment. AI will likely be the most transformative technology in history, and the company is well positioned to benefit as demand for AI infrastructure increases. Potential catalysts include generative AI, autonomous vehicles, and humanoid robots. Also, Nvidia has a burgeoning software business that may evolve into a significant source of revenue as those catalysts take shape.

Nvidia Stock: Forget AI Data Centers, Is This Market Nvidia's Next Big Growth Driver? | The Motley Fool

It's clear that Nvidia (NVDA 1.26%) has been the biggest winner of the artificial intelligence (AI) infrastructure boom. Its graphics processing units (GPUs) have become the go-to chips for running AI workloads in data centers, thanks to their parallel processing capabilities. Parallel processing allows chips to perform many calculations all at once, which is essential for both training large language models (LLMs) and running AI inference. Just as important is Nvidia's CUDA software platform, which makes it easy for developers to build and optimize AI models on its hardware. The combination of best-in-class GPU performance along with a sticky software platform has helped cement the company's lead in the data center space. At the same time, this has been an explosive market. Over the past two years, its data center revenue has gone from $4.3 billion in the fiscal first quarter of 2024 (ended April 30, 2023) to $39.1 billion in fiscal Q1 of 2026 (ended April 27, 2025). That's a nearly 10 times increase in just two years. Nvidia sees data center capital expenditures (capex) rising to more than $1 trillion by 2028. Not all that spending will go toward GPUs, but with its more than 80% market share in the GPU space, Nvidia is well positioned to capture a sizable chunk of that overall data center spending growth. However, that is not the only potential huge market that Nvidia is eyeing. While AI data center spending is Nvidia's largest market by far, it's certainly not the only end market it participates in. The GPU was originally created to speed up graphics rendering in video games. The company later created CUDA as a way to expand beyond this market, giving developers an easy way to program its GPUs for other tasks. However, the market for GPUs outside of video games was slow to develop. Around the same time CUDA was introduced, Advanced Micro Devices bought rival GPU maker ATI Technologies. With integration a top priority and not a lot of early traction outside of video games for GPUs, AMD was in no rush to create a competing software platform. Despite the slow uptake, Nvidia smartly began pushing CUDA for use in universities and research labs, which helped make it the default software program that developers were taught to program GPUs. Today, that is why Nvidia's GPUs have a dominant place in the data center. At this same time, though, Nvidia was also edging into another market: automobiles. In fact, Audi was one of its first big customers outside of the video game space. The German luxury carmaker began using Nvidia's GPUs in its infotainment and navigation systems, and Nvidia later built a full automotive platform called DRIVE, which is a family of hardware and software tools developers need for advanced driver-assistance and autonomous vehicle development. While long promised, autonomous driving is finally here. Alphabet's Waymo, for example, is now providing more than 250,000 paid robotaxi rides per week in the U.S. It's currently only in a few cities, but it's expanding rapidly. According to reports, Waymo uses Nvidia's GPUs in its vehicles. Waymo is not Nvidia's only automobile customer -- far from it. Mercedes, Volvo, and Hyundai all use Nvidia's DRIVE platform and GPUs to power self-driving technologies, while Toyota announced it would use Nvidia's platform and chips for advanced driver assistance features in its next-generation vehicles. Meanwhile, General Motors and Hyundai will use Nvidia technologies to improve their manufacturing with "smart factory" initiatives. Last quarter, Nvidia saw its automobile revenue surge 72% to $567 million. However, more growth is in store, with the company forecasting its auto revenue to rise to approximately $5 billion this fiscal year. The growth will come as new vehicles using its technology begin to hit the roads. Mercedes' new CLA sedan is the latest vehicle with its technology. It's easy to dismiss a segment that was only a fraction of its data center revenue last quarter, but with the data center, Nvidia showed how quickly end markets can ramp up. The autonomous driving market is still in its infancy, so the opportunity is just massive. With Waymo having just around 1,500 robotaxis now, it's easy to see that this could scale to 100x or more vehicles when it reaches scale. Meanwhile, Nvidia CEO Jensen Huang has predicted that every car on the road will eventually be robotic. With more than 1 billion cars on the road, that's a huge opportunity. At its investor day in 2022, Nvidia estimated the auto market could be a $300 billion opportunity. With Nvidia's stock trading at a forward price-to-earnings ratio (P/E) of 33 times this year's analyst estimates and a 0.7 price/earnings-to-growth (PEG ) ratio, with numbers below 1 considered undervalued, the stock is currently not pricing in any potential upside from its next big potential market opportunity.

2 Millionaire-Maker Artificial Intelligence (AI) Stocks | The Motley Fool

These two AI winners have minted fortunes, and it doesn't appear they'll stop anytime soon. Semiconductors, or chips, each containing countless microscopic circuits, have been around for years as the building blocks that make advanced technology possible. Artificial intelligence (AI) hasn't necessarily brought anything new to the table in that regard. It's artificial intelligence's staggering thirst for computing power, and thus, semiconductors, that has created perhaps the most significant investment opportunity the technology sector has seen since the early years of the internet. Ironically, two of the best AI stocks are of companies that were already known to Wall Street. These two stocks have already turned $10,000 investments into millions over their lifetime, and could continue to thrive as AI chip demand continues to soar. Here is what you need to know. Most technology investors are familiar with Nvidia's (NVDA 0.72%) immense success and gains, particularly since the emergence of generative AI in late 2022 with the arrival of ChatGPT. The company's expertise in GPU chips, which excel at efficiently performing heavy computing workloads, helped Nvidia grab control of the market for data center chips used for training AI models. More than two years after the AI movement took off, Nvidia still dominates. Research estimates peg Nvidia's share of AI data center ships for generative AI models at a breathtaking 92%. Of course, the pressure is on Nvidia to hold its share, but it has succeeded thus far in doing so. The company's CUDA programming platform optimizes the performance of its AI GPU chips, which has been a competitive moat that other companies haven't breached. Nvidia succeeded its Hopper architecture with Blackwell, and future chips will continue to deliver more power while consuming less energy. Over time, Nvidia may need to develop new revenue streams beyond data centers. Nvidia will have opportunities as AI eventually extends outside centralized data centers to the edge, bringing computing power to localized AI uses, such as autonomous vehicles and robotics. For now, AI data center investments continue to roar. Analysts estimate Nvidia will grow revenue by nearly 54% to $199.7 billion this fiscal year, reaching $250.8 billion the following year. Meanwhile, Wall Street anticipates that Nvidia will grow its earnings by an average of almost 29% annually over the long term. While the stock's forward price-to-earnings (P/E) ratio of 33 is higher than the broader market, it's a perfectly reasonable price for such a critical AI player with such excellent growth prospects. Broadcom (AVGO -1.06%) is quickly becoming a formidable force in the AI field. The company built its business on chips for networking and communications, and that's bearing fruit in the AI space. AI data centers utilize many thousands of chips that operate as clusters. For these clusters to function, all those chips must connect and work together, which requires special networking chips that Broadcom provides. AI networking chips accounted for approximately 40% of its AI revenue in Q2, representing a 70% year-over-year growth. Similar to Nvidia, Broadcom will likely sell more advanced chips over time that enable companies to build larger clusters of AI chips. Broadcom is diversified well beyond AI, so while the total business probably won't grow like Nvidia has, it's also not as dependent on AI, either. Broadcom's networking expertise is also unlocking additional AI opportunities. The company has established partnerships with several AI hyperscalers (the companies building all these data centers) on product roadmaps for custom AI chips for model training and inference. Inference chips, which enable models to operate effectively in real-world applications, will become increasingly important as AI continues to mature. Analysts are also optimistic about Broadcom's future, with expectations for revenue to grow by 21.7% to $62.7 billion this fiscal year, followed by $74.6 billion the following year. That top-line growth could translate to earnings growth averaging 23% annually over the long term. The stock is a bit more expensive, with a forward P/E ratio of 37, so investors who decide to invest may want to save some cash for when inevitable market volatility creates better buying opportunities.

Where Will Nvidia Stock Be in 5 Years?

Nvidia (NVDA 1.26%) stock has been under pressure this year on account of various factors, such as the tariff-fueled trade war, concerns about rising competition in the market for artificial intelligence (AI) accelerator chips, U.S. restrictions on chip exports, and fears of a potential slowdown in spending on AI infrastructure. However, the company's latest quarterly results show that it's continuing to grow nicely. Nvidia released its results for its fiscal 2026 first quarter (which ended April 27) on May 28. The company's revenue and earnings were better than Wall Street's expectations, despite its business taking a hit due to the export controls that blocked sales of its H20 processors to China. The data center business was once again the driving force behind Nvidia's impressive results, growing 73% year over year and accounting for 89% of its top line. But at the same time, the company also benefited from the growing adoption of its chips in two other areas. In fact, a closer look at the semiconductor specialist's growth drivers suggests that it is set to benefit from the proliferation of AI in multiple end markets, which could help the stock sustain its solid momentum over the next five years. Nvidia's multiple catalysts should ensure solid growth The data center business is the cornerstone of Nvidia's growth. Worth noting is that it is growing at a healthy pace despite restrictions on sales of the company's chips to China, which cost Nvidia several billions of dollars in lost revenue last quarter. CEO Jensen Huang pointed out that those export controls have effectively closed the $50 billion AI chip market in China to Nvidia. But that shouldn't matter a lot in the long run, as global investment in AI infrastructure is expected to hit a humongous $7 trillion by 2030, according to a forecast by McKinsey, with nearly three-fourths of that directed toward data centers. This huge outlay on AI infrastructure will be driven by multiple factors, such as an increase in inference and training workloads, the adoption of AI applications across various industries and applications, and investments by governments around the globe to enhance economic growth and security. So even if Nvidia remains locked out of the Chinese market, it still has a lot of room for growth in AI hardware. The good part is that the company is building AI infrastructure for several countries such as Japan, India, Korea, Spain, Italy, Germany, and the U.K. Huang believes that sovereign AI is set to become the next big growth driver for Nvidia. Importantly, Nvidia is witnessing robust growth in other markets, such as gaming and automotive as well. Its revenue from the gaming and AI PC segment shot up 48% from the year-ago period to a record $3.8 billion. Meanwhile, the year-over-year growth of its automotive and robotics revenue nearly matched that of the data center business. Both these segments can keep growing at elevated levels over the next five years thanks to AI. For instance, IDC projects that shipments of AI-capable PCs will grow at an annualized rate of 42% through 2028. It's also forecasting that shipments of 100-plus TOPS graphics processing units (GPUs) for PCs will grow from 23 million units in 2023 to more than 36 million units in 2028. Nvidia is the leader in the PC GPU market, with an estimated share of more than 80%, putting the company in a solid position to capitalize on this opportunity. Meanwhile, the company is also benefiting from its multiple partnerships in the automotive market, where its clients are using its platform to develop self-driving features. The automotive GPU market's revenue is expected to grow at an annualized rate of 33% through 2030, generating $45 billion in revenue at the end of the forecast period. This should prove another outstanding growth opportunity for the company. In the end, Nvidia seems well equipped to sustain solid growth rates over the next five years on account of its dominant presence in these multibillion-dollar markets, and that could help the stock deliver more upside. How much stock price upside can investors expect? Analysts' consensus estimates are for Nvidia's earnings to increase by 43% in the current fiscal year to $4.28 per share, followed by healthy double-digit percentage gains over the next couple of years as well. NVDA EPS Estimates for Current Fiscal Year data by YCharts. The chart above also tells us that analysts have raised their earnings growth expectations for Nvidia for fiscal years 2027 and 2028. Its lucrative growth drivers suggest that it may be able to outpace those forecasts in the long run. But even if we assume that the company's bottom line will grow at an annual rate of just 20% in the two years following fiscal 2028, its earnings could hit $9.50 per share after five years. Nvidia is currently trading at 31 times forward earnings, a discount to its five-year average multiple of 40. Assuming that the stock trades at a discounted forward earnings multiple of 25 in five years, its stock price at that point would be about $237. That points toward a potential gain of 73% from current levels. However, stronger gains cannot be ruled out if the company continues to command a richer valuation on account of its elevated growth rates. That makes this AI stock worth buying and holding for the long run.

Near a New All-Time High, Is Nvidia Stock Still a Buy? | The Motley Fool

The graphics processing specialist has rebounded from its recent lows. Is it too late to buy? There's no denying that the emergence of generative artificial intelligence (AI) was the spark that lifted Nvidia (NVDA -1.18%) stock to new heights. In recent months, however, the future has been less certain. Concerns about how AI models will evolve and whether they will need the latest and greatest chips sent some investors to the sidelines. In fact, earlier this year, Nvidia stock plunged 37% on fears the company's best days were behind it. It turns out the sky isn't falling after all. Nvidia has delivered two successive quarters of high-double-digit revenue growth, as demand for AI remains robust. Indeed, the stock is within striking distance of a new all-time high after notching gains of 50% over the past two months. Let's take a step back and review the opportunity, Nvidia's place in the AI ecosystem, and whether it's too late to buy the stock. Nvidia's original claim to fame is developing the graphics processing units (GPUs) that generate lifelike images in video games. However, it was the adapting of that technology to train and run AI systems that catapulted the chipmaker to new heights. The popular narrative is that its rivals are on the verge of a better solution, but thus far anyway, none has been forthcoming. The company established a beachhead in AI as early as 2013, giving Nvidia more than a decade-long head start on the competition. After developing processors focused on machine learning -- an earlier branch of AI -- Nvidia quickly became the gold standard, controlling as much as 95% of the market, according to CB Insights (via BBC News). That existing expertise gave Nvidia the advantage in the data center GPU space, where it currently controls an estimated 92% of the market, according to IoT Analytics. The buildout of data centers to meet the growing demand of AI continues, which bodes well for Nvidia. While Nvidia's growth has inevitably slowed from the triple-digit pace it managed last year, it still runs circles around the competition. For its fiscal 2026 first quarter (ended April 27), the company generated record revenue of $44.1 billion, which surged 69% year over year. Adjusted earnings per share (EPS) of $0.81 climbed 33% -- but that was after a $4.5 billion hit related to export controls for H20 chips originally destined for China. If not for that one-time charge, EPS would have grown 57%. Management expects the company's robust growth to continue. For its fiscal 2026 second quarter, Nvidia is guiding for record revenue of $45 billion, which would represent growth of 50%. This helps illustrate that despite tough triple-digit comps, Nvidia continues to grow at a remarkable pace. The stock's rebound over the past few months has come with a commensurate increase in its valuation, which begs the question: Has Nvidia stock gotten too expensive? Investors might be surprised to learn that simply isn't the case. Nvidia stock is selling for roughly 33 times forward earnings (as of this writing), which is an attractive valuation for a company that's expected to grow its profits by 50% in the coming quarter. Furthermore, when measured using the price/earnings-to-growth ratio (PEG ratio), Nvidia has a multiple of 0.56, when any number less than 1 is the standard for an undervalued stock. Despite the rapid run over the past two years, it's important to remember it's still early days for the adoption of generative AI. These groundbreaking systems have only been around for a little more than two years, and many believe the adoption cycle will continue for much of the next decade. Estimates vary wildly regarding the potential size of the AI market but they can still give context regarding the size of the opportunity. The generative AI market could be worth between $2.6 trillion and $4.4 trillion annually in the coming years, according to global management consulting firm McKinsey & Company. Given Nvidia's market-leading position, deeply entrenched technology, the magnitude of the opportunity, and its attractive valuation, I would argue it isn't too late to buy Nvidia stock. These aren't empty words: I added to my Nvidia position as recently as April.

Prediction: This Artificial Intelligence (AI) Stock Could Hit a $6 Trillion Valuation by 2030 | The Motley Fool

Nvidia (NVDA 1.26%) is the most valuable company in the world as of this writing, with a market cap of $3.4 trillion, and it has reached this position thanks to a tremendous rally of more than 1,500% in its stock price in the past five years. Investors will now be wondering if Nvidia has the potential to deliver more upside over the next five years following this phenomenal run. However, don't be surprised to see this semiconductor giant's shares jump higher and attain a $6 trillion valuation by the end of the decade. Let's take a closer look at the factors that could help Nvidia hit that milestone by 2030. Robust demand for Nvidia's AI chips has been the biggest reason behind the stock's terrific surge in recent years. The good part is that Nvidia continues to generate a massive amount of revenue from its AI chip business despite tackling headwinds such as export restrictions to key markets like China. This was evident from Nvidia's latest results for the first quarter of fiscal 2026 (which ended on April 27). The company's revenue shot up 69% year over year to $44.1 billion during the quarter, even though it lost $2.5 billion in revenue in fiscal Q1, owing to the restrictions on sales of its chips to China. The chipmaker also incurred a $4.5 billion inventory charge to write down the value of chips that were intended for the Chinese market. Moreover, Nvidia's fiscal Q2 revenue would take an $8 billion hit on account of the China-related restrictions. But the good part is that the company's guidance for the current quarter still calls for a 50% year-over-year increase in revenue, while its earnings are expected to increase by 44% despite anticipated loss in Chinese revenue. CEO Jensen Huang admitted on Nvidia's latest earnings conference call that the $50 billion Chinese market is now effectively closed to U.S. players such as Nvidia. Even then, analysts have increased their revenue estimates. That's not surprising, as Nvidia still has a massive sales opportunity in AI chips beyond the Chinese market. It is now entering new markets such as Saudi Arabia to build AI factories "powered by several hundred thousand of Nvidia's most advanced GPUs over the next five years," according to the company. Additionally, massive AI infrastructure projects such as Stargate, from which Nvidia has started benefiting already, could help it mitigate the lost opportunity in China. Management consulting firm McKinsey & Company predicts that AI-capable data centers could require investments worth a whopping $5.2 trillion by 2030 to build enough computing power to handle training and inference workloads. So investors would do well to look past the China-related problems that Nvidia is currently facing, as the broader opportunity in the AI data center market should be lucrative enough to help the chipmaker keep growing at a healthy pace for the next five years. Moreover, Nvidia is showing no signs of losing its grip over the AI chip market. Its data center revenue shot up an impressive 73% year over year to $39 billion in the previous quarter. That was miles ahead of Broadcom's $4 billion AI revenue and AMD's $3.7 billion data center sales in the previous quarter, the two chipmakers that are considered to be the closest to Nvidia in the AI chip race. Nvidia's data center growth was higher than the 57% growth recorded by AMD in this segment and close to the 77% growth in Broadcom's AI revenue, even though it has a much larger revenue base. This is a testament to just how popular Nvidia's AI chips are, with the company's latest generation of Blackwell processors already a major hit among cloud computing giants within two quarters of hitting the market. Even better, Nvidia has moved past just selling AI hardware. It also offers access to models that help customers train and deploy AI agents, along with other enterprise AI applications that allow customers to improve the efficiency of their large language models (LLMs). Its enterprise platforms are gaining traction in diverse industries such as cybersecurity and restaurants where companies are deploying Nvidia's solutions to streamline their operations or to build agentic AI applications. All this indicates that investors shouldn't miss the forest for the trees, as Nvidia's long-term prospects aren't dependent on just China. There is still a lot of room for growth in the AI chip market, and the company's diversification into other areas such as enterprise AI applications and automotive should be enough to power remarkable growth over the next five years. Nvidia is currently trading at 23 times sales. While that's three times the U.S. technology sector's average price-to-sales ratio, the company's dominant position in AI chips, the prospects of this market, and the other catalysts that are coming into play help justify that valuation. We have already seen in the chart that Nvidia's top line is expected to jump to $292 billion in three years. If it maintains its sales multiple at that time, it will be able to easily surpass a $6 trillion valuation in just three years, representing a big jump from current levels. However, if we assume Nvidia's top-line growth slows after fiscal 2028 to an annual rate of 15% in fiscal 2029 and 2030 from the 31% compound annual growth rate that it is forecast to clock between fiscal 2026 and 2028 (using fiscal 2025 revenue of $130.5 billion as the base), its annual revenue could jump to $386 billion after five years. If Nvidia trades at a discounted 15 times sales at that time, it could still hit a $6 trillion valuation by 2030. So, investors can still consider buying this AI stock in anticipation of more upside in the long run, as it seems capable of maintaining its healthy growth rate over the next five years.

2 Artificial Intelligence (AI) Stocks to Buy and Hold for the Next 20 Years | The Motley Fool

Artificial intelligence (AI) is sweeping across every industry. Researcher IDC forecasts that AI will contribute a total of nearly $20 trillion to the global economy over the next five years. By 2045, AI could drive enormous returns for investors who invest in the right stocks. Here are two stocks that could deliver tremendous returns over the next 20 years. Nvidia's (NVDA 1.26%) dominance in the market for graphics processing units (GPU) -- vital hardware for handling AI workloads -- has placed it in a lucrative position. Even after its meteoric rise over the last few years, the chipmaker still has plenty of growth ahead. Two years ago, on the company's fiscal Q4 2023 earnings call, CEO Jensen Huang stated, "I believe the number of AI infrastructures is going to grow all over the world." He expected to see more AI data centers built, and that Nvidia's chips, networking products, and software systems would help accelerate AI computing by a factor of 1 million times over the coming 10 years. Nvidia's latest quarterly report shows that Huang's prediction is continuing to play out. In a quarter where its revenue grew 69% year-over-year, Nvidia saw accelerating deployments of AI-purposed data centers, aka AI factories. There are nearly 100 Nvidia-powered AI factories in progress right now -- twice as many as there were a year ago. These specialized data centers are being built across every industry and geography. Nvidia is in a solid competitive position with its in-demand full-stack solutions that cover hardware, networking components, software, and systems. Its networking revenue alone jumped 64% over the previous quarter, reflecting a massive jump in demand for networking components to handle the massive growth in data processing and AI workloads that's happening now. Industry estimates pointing to a $1 trillion data center opportunity could be underestimating the actual long-term opportunity for Nvidia. Nvidia has generated more than $148 billion in trailing 12-month revenue and its top line is still growing by more than 50% year over year. That trajectory for a company of this size indicates an enormous opportunity. Nvidia is playing a vital role in meeting the demand for AI. While at some point there could be a slowdown in data center spending that saps Nvidia's momentum, the combination of its powerful GPUs and its popular networking and software solutions provides it with a wide competitive moat. The stock should continue to deliver long-term growth, as it has over the last quarter of a century. Facebook and Instagram owner Meta Platforms (META 1.95%) could be a sleeper AI beneficiary over the long term. When AI ushers in time-saving services like fully autonomous robotaxis, people will have a lot more time to do other things, such as browsing social media. That's just one way AI could benefit Meta's business over the next 20 years that is not reflected in the stock's valuation. Investors can get a hint of the impact that AI could have on Meta's business by looking at how much the company is investing in the technology. It is planning for capital expenditures of at least $64 billion in 2025, and those investments will go primarily toward data centers. (Investors should note that this rising spending on hardware is also ringing the cash register for Nvidia.) Meta's high returns on capital show that it doesn't spend money like this unless management sees attractive returns down the road. The company is investing in AI for a number of initiatives, including new experiences to drive more useful and immersive experiences across its family of apps. One of the ways it brings more useful content is by showing its users more relevant ads. Over the last few years, Meta has benefited from a growing digital ad market that has started to implement AI technology for improved ad targeting. Revenue grew 22% in 2024, and much of this momentum continued in Q1 2025, when revenue rose by 16% year over year. Meta could also benefit from the launch of new devices powered by AI, such as its Meta AI glasses. More than 1 billion people wear glasses, and Meta believes that in the future, AI will be integrated into a large number of these glasses. So far, it seems to be tapping into a big opportunity, as sales of Meta's Ray-Ban AI glasses have tripled over the last year. More than 3.4 billion people use Meta Platforms' apps every day. That's a huge built-in audience for it to leverage AI technology to grow the value of the business. Its current valuation of 27 times forward earnings estimates is a reasonable price, and leaves plenty of potential for the company's growth to drive healthy stock price gains over the long term.

3 Top AI Stocks to Buy in June 2025 | The Motley Fool

The U.S. equity market made a strong recovery in May 2025, fueled by robust earnings, decreasing trade tensions, and rising investor confidence in the U.S. economy -- a significant improvement compared to the market's performance in April 2025. Now, Deutsche Bank analysts have raised the target for the benchmark S&P 500 index from 6,150 to 6,550 by the end of 2025. Given this renewed market optimism, artificial intelligence (AI) stocks are poised to be key beneficiaries of the next wave of capital inflows. Long-term investors can benefit from this trend by investing in these high-quality, artificial intelligence (AI)-powered companies that offer significant growth potential in the evolving market landscape. June is a good time to take a closer look at these three top AI stocks. Nvidia (NVDA 1.26%) has reported stellar results for the first quarter of fiscal 2026 (ended April 27, 2025). The company reported revenue of $44.1 billion, representing a 69% year-over-year increase. Nvidia also generated a solid $26 billion in free cash flow. Nvidia currently accounts for nearly 80% of the AI accelerator market. While a dominant presence in AI training workloads, the company is also focused on inference (real-time deployment of pre-trained models) workloads. The company is at the forefront of handling reasoning workloads (computationally intense and complex inference workloads) with its Blackwell architecture systems. Major cloud providers are already deploying these chips at a massive scale -- almost 72,000 GPUs weekly -- and plan to ramp up even more in the coming quarter. Hence, Blackwell is powering the next phase of AI where technology is thinking longer, solving problems, and giving better answers than just responding with pre-written answers. Besides hardware leadership, Nvidia's robust software ecosystem has ensured developer lock-in and a sticky customer base. With the CUDA parallel programming platform, TensorRT for deployment, and NIM microservices for inference, clients find it extremely costly and time-consuming to switch to competitors. The company has also built a healthy networking business, with this segment's revenue growing 64% quarter over quarter to $5 billion in the first quarter. Thanks to the technological superiority of its comprehensive ecosystem, Nvidia managed to provide a healthy outlook for fiscal 2026's Q2, despite its revenue being negatively affected by nearly $8 billion due to export restrictions for the Chinese market. Nvidia stock trades at 31.8 times forward earnings, which is not a particularly cheap valuation. But considering its growth trajectory and competitive advantages, Nvidia is a smart AI pick now, even at elevated valuation levels. Broadcom (AVGO -4.99%) has emerged as a prominent AI infrastructure player in 2025. The company's custom AI chips and networking solutions are being increasingly used by three prominent hyperscaler clients -- rumored to be Alphabet, Meta Platforms, and Chinese company ByteDance -- to optimize the execution of their specific workloads. CEO Hock Tan expects the three hyperscalers to generate a serviceable addressable market (SAM) of $60 billion to $90 billion in fiscal 2027. Additionally, the company is engaging with four additional hyperscalers to develop custom chips, underscoring the even larger market potential. Beyond custom chips, Broadcom is building the critical networking infrastructure that enables the training and deployment of large and powerful frontier AI models. The company's recent $69 billion acquisition of VMware positioned it as a key player in the enterprise software and hybrid cloud infrastructure space. With VMware's cloud orchestration and virtualization technologies, Broadcom can offer full-stack AI infrastructure solutions to its clients. Broadcom stock currently trades at 37.8 times forward earnings. However, considering its critical role in building global AI infrastructure, the company is an excellent pick, despite the rich valuation. Previously a cryptocurrency mining operator, CoreWeave (CRWV 3.90%) has now positioned itself as a prominent "AI Hyperscaler." Unlike traditional hyperscalers such as Amazon's AWS, Microsoft's Azure, or Alphabet's Google Cloud Platform, which are primarily designed for general-purpose applications, CoreWeave's cloud infrastructure has been specifically designed for AI and machine-learning workloads. The company has established an extensive network of 33 purpose-built AI data centers across the United States and Europe. Solid demand for CoreWeave's specialized AI-first cloud infrastructure is directly driving its exceptional financial performance. The company reported $982 million in revenue in the first quarter of fiscal 2025, up 420% year over year. At the same time, the company's adjusted operating income rose 550% year over year to $163 million. This highlights that the company is on its way to becoming profitable, despite the high level of capital expenditures typical in the AI data center business. The company had a massive $25.9 billion revenue backlog from multi-year contracts at end of the first quarter. CoreWeave's strategic partnership with Nvidia is proving to be a significant competitive advantage. The deep relationship has given the company preferential access to Nvidia's cutting-edge GPUs and advanced networking technologies. With Nvidia having more than a $2.5 billion equity stake in CoreWeave (at current prices), the latter is practically assured of continued access to next-generation GPUs in the coming years. CoreWeave stock currently trades at 37.5 times sales, which seems quite rich. However, the elevated valuation is justified considering the company's huge addressable market, robust contract backlog, and impressive financial performance, making it a buy now.

3 Leading Tech Stocks to Buy in 2025 | The Motley Fool

The technology sector has helped lead the market higher over the past decade, and with new technologies such as artificial intelligence (AI) and autonomous driving continuing to emerge, there is every reason to believe it can do the same over the next decade. Let's look at three leading tech companies to buy this year. Graphics processing units (GPUs) maker Nvidia (NVDA 1.26%) has established itself as the leading semiconductor company in the world. The strength of GPUs lies in their parallel processing capabilities, which allow them to perform many calculations at the same time. This capability makes these powerful chips ideal for running AI workloads in the data center. The real secret to Nvidia's successes, though, is its CUDA software program. Created to expand the market for GPUs beyond their original intent of speeding up graphics rendering in video games, Nvidia aggressively pushed the software platform into universities and research labs in its early days, which helped make it the platform upon which developers learned to program GPUs for various tasks. In the years since, the company has built a collection of tools and libraries that help improve the performance of its GPU for use in running AI workloads. This has helped give the company a dominant market share in the GPU space of more than 80%. As the AI infrastructure market continues to grow, Nvidia continues to be the biggest beneficiary. However, that's not its only growth market, and the company also sees a big future opportunity in the automobile and autonomous driving sector. After all, autonomous vehicles need to perform quick calculations, which is the strength of GPUs, so they don't crash. Since Nvidia doesn't have a recurring revenue stream, any slowdown in its end markets is a risk, but right now these markets still appear to be in the early days of their growth cycles. Alphabet (GOOGL 3.24%) (GOOG 3.02%) is certainly not without its risks, as some investors fret over AI disrupting its search business, while at the same time, it faces legal remedies from the U.S. government after losing an antitrust trial. However, the company has a collection of very attractive businesses and investors have largely ignored the advantages in search the company has. Alphabet is about much more than Google search. Its YouTube business is not only the most-watched streaming platform, but it is also one of the largest digital advertising platforms in the world. Meanwhile, its cloud computing unit, Google Cloud, is Alphabet's fastest-growing business, as it helps customers build out and run AI models and apps on its platform. Also not to be overlooked is its robotaxi business, Waymo, which has a first-mover advantage in the U.S. and is expanding rapidly. That said, Google is still Alphabet's bread and butter, but it's not time to write this dominant search engine off just yet. Google has a large distribution and ad network advantage that should not be overlooked. Its distribution advantage comes from its popular Android smartphone operating system and Chrome browser, which use its Google search engine as a default. Meanwhile, it has a revenue-sharing agreement with Apple and browser companies like Opera to run their search queries, as well. In addition, it has spent decades building one of the largest ad markets on the planet, with an ability to serve not only national advertisers, but also local businesses. Alphabet also knows how to monetize search better than any company, and as the world moves toward AI search and chatbots, it's focused on profiting from queries that have commercial intent. That's why when it recently launched its new AI search mode, it included several commerce-focused features aimed at enhancing monetization, such as "Shop by AI," which allows users to find products simply by describing them, virtually try on clothes using a photo, and even track prices. With unmatched distribution, a massive ad network, and a focus on commerce monetization, Alphabet is well situated to be an AI search winner. Salesforce (CRM 2.75%) has long been the leader in customer relationship management software, and now it's setting its sights on becoming a leader in AI agents through its new Agentforce platform. The company's core value proposition has always been about unifying customer data, and it has expanded this concept into the data center with its Data Cloud offering. Through acquisitions, it's also established a leadership position in employee and customer-facing apps, such as Slack and Tableau. This type of ecosystem is an ideal environment for AI agents to interact with this data and use it to automatically perform tasks. Agentforce includes pre-built AI agents that can help businesses streamline tasks, as well as low-code and no-code tools that let customers design their own custom AI agents with little technical expertise. It has also established an Agentforce marketplace with more than 200 partners to offer more templates and broaden use cases. Thus far, Agentforce has seen solid momentum, with it already having more than 4,000 paying customers since its October launch and many more in pilots. Salesforce is looking to lead a digital labor revolution. It plans to accomplish this through its ADAM framework that combines agents, data, apps, and metadata into one platform. It recently introduced a new consumption-based model that better aligns agent costs with business outcomes to help improve customer satisfaction and increase adoption. Agentic AI is a competitive space, but Salesforce looks like it has the platform to be a winner.