Nvidia (NVDA 0.80%) stock has turned out to be a terrific investment over the past decade, turning a modest $100 outlay into more than $9,300 over that time frame, despite bouts of volatility along the way.
The chipmaker's outstanding growth can be attributed to the diverse applications of its graphics cards, which are now deployed in multiple areas, including data centers, automotive, and artificial intelligence (AI), in addition to the PCs that they were originally developed for. But can Nvidia stock replicate its outstanding gains over the next decade as well? Let's find out.
NASDAQ: NVDA
Key Data Points
Nvidia's sales have grown sixfold in the past decade
Nvidia now has a market capitalization of more than $680 billion, which is way higher than what the figure was a decade ago. This massive increase in its market cap has been driven by a terrific expansion in the company's business over the years.
NVDA Revenue (TTM) data by YCharts
Nvidia finished fiscal 2013 with revenue of $4.28 billion. In fiscal 2023, the company's top line touched almost $27 billion. The semiconductor giant's revenue has multiplied sixfold in the past 10 years, which is not surprising given the growing demand for the computational power that its graphics cards deliver.
From AI, the cloud, supercomputers, and beyond, Nvidia's cards seem to be omnipresent. Indeed, the company is the dominant player in every niche where it operates. For instance, it finished 2022 with an 82% share of the discrete graphics processing unit (GPU) market. Additionally, Nvidia controls over 90% of the market for enterprise GPUs that are deployed in data centers, supercomputers, and cloud computing.
The company's domination of these markets is one of the reasons why it could continue to deliver outstanding gains to investors in the next decade.
Nvidia is set for terrific growth over the next 10 years
Although weakness in the PC market has hamstrung Nvidia's growth in recent quarters, investors would do well to focus on the bigger picture. Analysts are expecting a turnaround in the company's fortunes in the current fiscal year, forecasting an 11% increase in revenue. Nvidia is projected to deliver stronger revenue growth of 24% in fiscal 2025, generating $37 billion.
A closer look at the markets that Nvidia operates in indicates that it could sustain its solid growth for a very long time. The global GPU market, for instance, is expected to expand tenfold over the next decade, generating $400 billion in revenue in 2032 compared to $40 billion last year. Nvidia's revenue of $27 billion in fiscal 2023 (which ended on Jan. 29, 2023), suggests that the company controls more than two-thirds of this space.
For Nvidia to increase its revenue six times over the next decade to $162 billion, its share of the global GPU market needs to be around 40%. However, the company could command a greater portion of this space after a decade -- or even maintain its current position. That's because Nvidia's GPUs enjoy a technological advantage over rivals', which explains why its share of this market has increased over the years.
Moreover, its GPUs are now powering emerging applications such as generative AI, a niche that has unlocked another massive growth opportunity for the company. Throw in its terrific prospects in the automotive, cloud gaming, and server processor markets -- all of which are getting started -- and it is easy to see how the chipmaker's revenue could increase rapidly over the next decade.
Assuming Nvidia generates annual revenue of $160 billion after 10 years based on the above discussion and trades at 17 times sales (its five-year average price-to-sales ratio), its market cap could jump to more than $2.7 trillion. That would be nearly four times the company's current market cap, suggesting that this tech stock could continue making investors wealthier over the next decade as well.
