Where will Nvidia’s soaring stock be in 10 years?

nvidia‘S (NVDA -0.95%) The growth thesis depends on: generative artificial intelligence (AI) – A technology megatrend that is driving demand for advanced hardware. And according to analyst forecasts, there is still plenty of room to run in this fast-growing market. This means the company may find much more synergistic growth drivers over the long term. Let’s dig deeper to see what could happen in the next 10 years.

Transforming GPUs into a trillion-dollar growth engine

When Nvidia was founded in 1993, the hardware it pioneered would have been difficult to imagine. graphics processing unit (GPU) will bring massive changes to the technology landscape.

Originally designed for video game visual rendering, GPUs operate through parallel processing, computing multiple tasks simultaneously. This feature makes it extremely useful for new uses such as cryptocurrency mining and training large-scale language models (LLMs) behind generative AI applications.

For Nvidia, this trend has transformed its operations. As of the third quarter, data center chip sales (such as the AI-enabled H100) accounted for 80% of revenue, while its previously core gaming business fell to less than 16%.

With industry experts predicting the AI ​​chip market will grow to $400 billion by 2027, Nvidia has plenty of room for near-term growth through hardware sales. However, the company will almost certainly face increasing competition, which could eventually erode its market share and margins. To continue its market-leading growth, Nvidia may need to reinvent itself once again, and management appears to have the ability to do it.

Can Nvidia become a software company?

There are several hardware companies in the technology industry that have shifted to a business model that relies heavily on software to protect their assets. economic moat Stabilize revenue streams. One of the best examples is apologize, driving iOS and App Store adoption with industry-leading iPhone sales. Nvidia could make a similar move as it shifts into software and services, according to analysts at Melius Research.

Nvidia has long relied on custom software to help data center customers get the most out of their GPU-based systems. But over time, this business could become a key growth driver in its own right.

Image source: Getty Images.

Nvidia has launched a new AI supercomputer called DGX Cloud that uses cutting-edge hardware to enable enterprise customers to build and deploy custom AI models without having to build their own data center infrastructure. Naturally, this move will put chipmakers in competition with traditional cloud service providers such as: Amazon With AWS alphabet‘S Google Cloud. However, Nvidia’s technology lead in designing the GPUs that run these platforms gives it a competitive advantage to rapidly scale this new growth driver.

Where will Nvidia be in the next 10 years?

and market capitalization At approximately $1.5 trillion, Nvidia is already the sixth most valuable company in the world. And the three companies above it (Apple, microsoft, Amazon) gained ground by shifting from only physical products to software. Over the next decade, Nvidia has significant growth potential, and we wouldn’t be surprised if it eventually overtakes some of its larger competitors.

The stock is already up 211% over the past 12 months, but the company still boasts a reasonable price-to-earnings (P/E) multiple of 30. Nasdaq 100 average. This means it’s not too late for investors to bet on Nvidia’s long-term success.