/AI%20(artificial%20intelligence)/Artificial%20intelligence%20and%20machine%20learning%20concept%20-%20by%20amgun%20via%20iStock.jpg)
Nvidia (NVDA) is among the largest companies in the world, valued at a market cap of over $3.3 trillion. In the last 10 years, the chip designer has returned an astonishing 27,496% to shareholders.
In the last two years alone, the stock has surged over 1,000%, as it is at the epicenter of the artificial intelligence (AI) megatrend. Several companies are using Nvidia’s graphics processing units (GPUs) to develop and train generative AI platforms such as ChatGPT. The robust demand for these products has allowed Nvidia to report revenue of $96.3 billion in the last four quarters, up from just $10.9 billion in fiscal 2020 (which ended in January).
While its sales more than doubled to $60.9 billion in fiscal 2024, top-line growth has accelerated to almost 200% in the last 12 months. The company’s upcoming Blackwell series chips could be the next key driver for the semiconductor giant, pushing valuations higher.
Let’s see if Nvidia stock can get even bigger and continue to deliver outsized gains to shareholders in the upcoming decade.
The Bull Case for Nvidia Stock
Against a backdrop of strong demand, Nvidia remains a leader in the AI chip market. In fact, according to various reports, the semiconductor giant has a market share of between 75% and 90% in the AI chip segment. This market leadership has allowed Nvidia to benefit from pricing power, ending Q2 with gross margins of over 75% while operating margins were over 62%.
After meeting with management, Morgan Stanley analyst Joseph Moore wrote that Nvidia could actually gain an even bigger share of AI processors in 2025, "as the biggest users of custom silicon are seeing very steep ramps with NVIDIA solutions next year."
Moore reiterated an “Overweight” rating for NVDA stock with a price target of $150. The analyst added that previous production snags with Blackwell appear to be resolved, and cited "high conviction in prior guidance that they will have several billion in Blackwell revenue in the January quarter."
What's Next for NVDA Stock?
The AI accelerator market is estimated to expand at a compound annual growth rate of 29% through 2030. In an investor presentation yesterday, Advanced Micro Devices (AMD) CEO Lisa Su - while introducing a new chip to rival Nvidia's offerings - projected the AI accelerator market to grow to a whopping $500 billion by the end of 2028. So, if Nvidia can maintain a market share of 50%, its GPUs might rake in $250 billion in 2028.
Rising chip demand has allowed Nvidia to report triple-digit revenue and earnings growth for five consecutive quarters. Notably, analysts expect sales growth to decelerate to “just” 42% year over year in fiscal 2026.
Comparatively, adjusted earnings are forecast to expand from $1.19 per share in fiscal 2024 to $4.03 per share in 2025. So, priced at 33x forward earnings, NVDA stock is not too expensive, given that adjusted earnings are on track to rise by more than 50% annually through fiscal 2029.
Out of the 41 analysts covering NVDA stock, 35 recommend “strong buy,” two recommend “moderate buy,” and four recommend “hold.” The average 12-month target price for Nvidia stock is $149.99, indicating an upside potential of 11.3% from current levels.
Nvidia’s competitive moat, strong growth prospects, widening profit margins, and an expanding AI market make it a top stock to own, even at a $3.3 trillion valuation.
