Nvidia’s Meteoric Growth Trajectory
The last five years have been a thrilling rollercoaster ride for Nvidia (NASDAQ: NVDA) investors. The company’s stock has experienced an exhilarating surge, transforming a $1,000 investment in January 2019 into $14,550 as of the present.
This stratospheric rise in Nvidia’s stock price can be attributed to the remarkable expansion in the company’s revenue and earnings. This growth has been propelled by various factors, including the surging demand for gaming hardware, the increasing need for high-performance computing applications, the escalating deployment of semiconductors in automobiles, and now, the requirement for graphics cards to train artificial intelligence (AI) models.
Nvidia is positioning itself to deliver even more robust returns over the next five years through its ambitious product roadmap, allowing it to seize multiple multi-billion-dollar opportunities. Notably, the company identified a $1 trillion revenue opportunity across several end markets a couple of years ago, including automotive, gaming, enterprise software, and chips and systems.
Ending fiscal 2024 with a projected $59 billion in revenue, Nvidia is anticipated to experience a substantial acceleration in revenue and earnings growth over the next decade as it delves deeper into its addressable market.
Nvidia’s Unabated Growth Trajectory
At the beginning of fiscal 2019, Nvidia recorded annual revenue of $11.7 billion. With its fiscal 2024 forecast indicating that its revenue will skyrocket five-fold in just five years, the company seems set for a compound annual growth rate (CAGR) of 38%. A similar CAGR over the next five years could propel Nvidia’s annual revenue to a staggering $295 billion by fiscal 2029.
However, some Wall Street analysts believe that Nvidia could surpass these projections. For instance, Mizuho analyst Vijay Rakesh predicts that Nvidia might generate annual revenue of $300 billion by 2027 solely from AI chip sales, riding on a commanding 75% share of this swiftly growing market.
Nvidia’s dominance in the AI chip arena, which has powered the company’s significant revenue and earnings surge in the past year, positions it as the foremost player in one of today’s hottest tech segments.
Moreover, with Nvidia’s recent unveiling of new consumer-focused graphics cards designed to run AI applications directly on desktops and laptops for gaming, creating large language models, customizing generative AI models, and even inferencing applications, the company is strategically tapping into the burgeoning demand for edge AI devices such as smartphones, personal computers, and cameras, expected to witness a 26% annual growth through 2032 and generate $143 billion in annual revenue by the end of the forecast period.
With such promising opportunities on the horizon, Nvidia seems poised for another stellar performance over the next five years, further delighting investors.
Investors Stand to Reap Rich Rewards
Nvidia boasts a five-year average price-to-sales ratio of 20. If the company’s revenue growth over the next five years mirrors its past performance, it is reasonable to anticipate Nvidia maintaining its average sales multiple. Based on a top line of $300 billion after five years, this points toward a staggering market cap of $6 trillion, dwarfing Nvidia’s current market cap of approximately $1.35 trillion.
Furthermore, Nvidia’s discounted forward price-to-sales ratio of 14 hints that its market cap could leap to $4.2 trillion with the $300 billion revenue estimate, indicating a threefold surge in Nvidia’s stock price over the next five years.
Considering these factors, it is evident that investors can look forward to Nvidia experiencing a substantial upward trajectory over the next five years, potentially multiplying their investments once again and cementing its position as a top pick for long-term investors.