Chances are that just a few years ago you had never heard of a company called OpenAI. But that all changed on Nov. 30, 2022 -- the day OpenAI released ChatGPT to the public and gave birth to the artificial intelligence (AI) megatrend.
Since ChatGPT's debut, no other megacap technology stock has benefited more than semiconductor powerhouse Nvidia (NVDA 0.48%). With shares up by more than 750% in less than three years, Nvidia's valuation has climbed by the trillions.
With so much excitement surrounding the company, though, could Nvidia keep skyrocketing? Billionaire hedge fund manager Philippe Laffont thinks so. Let's dig into what Laffont's investment firm, Coatue Management, has to say about Nvidia's growth prospects over the next five years.
Despite its already epic run, now may still be a lucrative opportunity to buy some shares in the chip designer and hold on tight.
NASDAQ: NVDA
Key Data Points
Laffont's hedge fund sees explosive upside for Nvidia
Each year, Coatue hosts a conference called East Meets West (EMW), during which leaders from the technology and investment worlds gather and discuss big trends fueling the market.
According to Coatue's 2025 EMW presentation, the firm sees Nvidia remaining as one of the most valuable companies in the world over the next five years. By 2030, Coatue is forecasting a market capitalization of $5.6 trillion for Nvidia -- implying nearly 60% upside from current levels.
Image source: Getty Images.
What could the next five years look like for Nvidia?
When it comes to investing in Nvidia, it's important for investors to consider all angles -- whether these are positive tailwinds or negative headwinds. As far as challenges are concerned, Nvidia faces two primary uncertainties.
The first surrounds the company's prospects in China, which could begin to witness notable deceleration as new tariff policies and export controls become established. In addition, rising competition from Advanced Micro Devices in combination with increased investment in custom silicon from some of Nvidia's own customers -- namely Amazon, Microsoft, Alphabet, and Meta Platforms -- could put a dent in the company's data center business.
While both of these scenarios present a degree of uncertainty surrounding Nvidia, I see each of them as short-term issues.
Regarding customer acquisition, ongoing nurturing with emerging customers such as xAI and Oracle suggest that Nvidia shouldn't have much of an issue fulfilling any demand that the company may lose from its "Magnificent Seven" peers. In addition, despite China currently representing a sizable portion of Nvidia's revenue base, new relationships across other geographies -- particularly the Middle East -- have the potential to make up any lost ground in Asia over time.
Thinking longer-term, however, Nvidia's growth prospects appear bright. For starters, following the inauguration of President Donald Trump back in January, Oracle, OpenAI, and SoftBank announced a joint venture called Project Stargate -- which aims to invest $500 billion into AI infrastructure in the U.S. through 2029.
In addition, management consulting firm McKinsey & Company recently reported that AI infrastructure spend could reach $6.7 trillion by 2030. The biggest beneficiary from this spend? Chip designers and AI data centers. That bodes well for Nvidia.
Even though Nvidia's near-term growth may give off the appearance of deceleration given challenges in China and the introduction of more chips, the long-term narrative supports the idea that AI capital expenditures (capex) will continue to build momentum over the next five years. To me, these secular tailwinds suggest that Nvidia's longer-term growth potential far outweighs any bumps the company might experience in the near term.
Is Nvidia stock a buy right now?
When investors see that a stock has risen by several hundred percent over just a few years, they may assume they missed out on the opportunity. But in the case of Nvidia, valuation trends suggest that now could be as good a time as any to buy the stock.
NVDA PE Ratio (Forward) data by YCharts
ChatGPT became commercially available roughly three years ago. During this period, investors have watched Nvidia transform into a company primarily focused on chipsets for high-performance gaming and PCs into an integral player powering generative AI development across the board.
And yet, per the chart above, Nvidia's forward price-to-earnings (P/E) multiple of 34.2 is right in line with its three-year average. Looked at a different way, Nvidia's forward earnings ratio has normalized considerably from prior levels despite the company's impressive growth and robust future outlook.
I am aligned with Coatue's forecast in that Nvidia still has substantial room to run over the next five years. To me, Nvidia stock is trading for a bargain right now and I see the stock as a no-brainer for AI investors.
