Its share price has increased 850% since January 2023, a period that roughly coincides with the launch of ChatGPT.
That implies 25% upside from its current share price of $140.
Could Nvidia stock turn $50,000 into $1 million over the next decade?
The investment thesis for Nvidia is bigger than AI chips What sets Nvidia apart is vertical integration.
Nvidia is unlikely to turn $50,000 into $1 million over the next decade Nvidia shares would need to increase 1,900% (20-fold) in the next decade to turn $50,000 into $1 million.
For many years, Nvidia (NVDA 1.26 percent) has been a mainstay in the artificial intelligence (AI) industry. Since January 2023, roughly when ChatGPT was introduced, its share price has risen by 850 percent. However, Wall Street remains overwhelmingly optimistic about the semiconductor business.
Nvidia “will be the most important company to our civilization over the next decade,” according to CFRA Research’s Angelo Zino. In general, the median 12-month target price among the 73 analysts who track Nvidia is $175 per share. Its current share price of $140 indicates a 25 percent increase.
What do I think about Nvidia stock? Could it go from $50,000 to $1 million in the next ten years?
Beyond AI chips, Nvidia has a larger investment thesis.
Vertical integration is what makes Nvidia unique. The business holds a market share of more than 90% in data center graphics processing units (GPUs), which are chips that speed up intricate tasks like artificial intelligence (AI). However, the business adds networking hardware, CPUs, and interconnects to its GPUs.
Additionally, Nvidia creates software. For use cases such as conversational agents, autonomous robots, and optimization systems, AI Enterprise is a collection of tools, code libraries, and pretrained models that simplify the creation of AI applications. Those tools are used by CrowdStrike to support its cybersecurity platform’s threat detection features.
In a similar vein, the software platform Omniverse facilitates the creation of 3D applications. Engineers can use it as a simulation engine to create artificial data for machine learning model development. Amazon trains robots at fulfillment centers and optimizes warehouse design using the Omniverse platform.
At the objective MLPerf benchmarks, which assess AI systems on training and inference workloads, Nvidia routinely sets performance records. The fact that Nvidia creates the best AI accelerators available gives them a significant competitive edge. The company can design entire data center systems with the “lowest total cost of ownership,” according to CEO Jensen Huang, thanks to vertical integration, which strengthens that strength.
According to Grand View Research, through 2030, spending on AI services, software, and hardware will rise at a rate of 35.7 percent per year. Nvidia has a good chance of keeping up with that rate of growth. In fact, Wall Street projects that through the fiscal year that ends in January 2027, earnings will increase by 40% yearly. This lends credence to the current valuation of 44 times earnings.
During the next ten years, Nvidia is unlikely to make $1 million from $50,000.
To make $50,000 into $1 million, Nvidia’s stock would have to rise 1,900% (20 times) over the following ten years. Theoretically, returns of that size could occur during that time.
In actuality, seven of the SandP 500’s stocks (~GSPC 1.03 percent) have reached that threshold in the past ten years, as indicated below.
And Nvidia: +25,700%.
Micro Devices Advanced: +4,980 percent.
+2,380 percent for Axon Enterprise.
2110 percent for Texas Pacific Land.
1,950% for Arista Networks.
Tesla: 1,920 percent.
Equal Isaac: 1,900 percent.
Though theoretically 20-fold returns are achievable, Nvidia has very little chance of achieving that goal within the next ten years. The market value of the company would reach $68 trillion if the stock increased 20 times, as it is currently worth $3.04 trillion. Given that the current value of the entire S&P 500 is only $48 trillion, that seems improbable.
Nvidia is still a good investment, though. Given the growing demand for AI infrastructure, the company is well-positioned to profit from what is expected to be the most revolutionary technology in history. Autonomous vehicles, generative AI, and humanoid robots are examples of possible catalysts. Additionally, Nvidia has a growing software business that, as those catalysts materialize, could become a substantial source of income.
