Nvidia (NVDA -2.26%) is the world's largest company and has risen to this position at an unbelievable pace, but it's far from done growing. Nvidia is one of the primary benefactors of the artificial intelligence (AI) arms race because its GPUs have become the standard computing unit that many AI companies have built their models on. There is still several years' worth of strong growth ahead for Nvidia's stock, and investors should still consider adding to an existing Nvidia position in their portfolio right now.
But what kind of upside can investors expect over the next three years? Let's find out.
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Data center growth is driving Nvidia's success
Nvidia makes graphics processing units (GPUs), computing hardware that specializes in processing arduous workloads. Originally, GPUs were intended for gaming graphics (thus the name), but they eventually found use cases beyond gaming, including engineering simulations, drug discovery, mining cryptocurrencies, and ultimately, processing AI workloads.
The biggest reason Nvidia has been such a successful investment is that it's one of the primary companies that is profiting from the massive AI arms race. While many of the big tech companies are investing billions of dollars in data centers to offer AI tools that may eventually generate revenue, Nvidia is a primary recipient of this investment.
While 2025 is shaping up to be a record year for data center spend, next year could be even bigger. Just look at what Meta Platforms said about 2026 capital expenditures:
While the infrastructure planning process remains highly dynamic, we currently expect another year of similarly significant capital expenditures dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our artificial intelligence efforts and business operations.
This quote clearly indicates that Meta is going to significantly exceed the $66 billion to $72 billion range it gave investors for 2025 capital expenditures in 2026. Many of the AI hyperscalers will likely deliver similar language as we approach 2026, and this bodes well for several companies, including Nvidia.
This data center growth backs up a projection that Nvidia gave during its 2025 GTC event. In 2024, a third party estimated that global data center capital expenditures were $400 billion. By 2028, it's expected to rise to $1 trillion. If that comes true, what can shareholders expect Nvidia's stock price to be in three years?
Nvidia's growth would take it to nearly $250 per share
In FY 2025 (which encompasses most of 2024), Nvidia's revenue totaled $115 billion. That indicates nearly 30% of the estimated data center spend went to Nvidia. To bake a little conservatism into our projection, let's estimate that Nvidia can capture 25% of the forecasted $1 trillion. This conservatism allows the overall data center buildout figure to be smaller and allows other technologies coming to market to eat into Nvidia's data center share.
That would indicate that Nvidia would generate $250 billion in data center revenue alone, but Nvidia also has other parts of its business that it can benefit from. In FY 2025, Nvidia generated $131 billion in revenue, so there is still a sizable percentage of revenue that comes from non-data center sources. If we estimate that this remaining revenue grows at a 10% pace, its non-data center revenue would rise to $23 billion by 2028.
So, using these projections, Nvidia's revenue would total around $273 billion, up 84% from today's level. Depending on whether you think Nvidia's valuation is reasonable or not, its revenue growth could directly correlate to stock price growth.
However, I think it's a tad expensive. Currently, Nvidia's stock trades at nearly 60 times earnings. If that were to fall to 40 times earnings and if Nvidia can maintain a 55% profit margin (it only fell in Q1 due to the sizable write-off of its H20 chips), then Nvidia would produce $150 billion in profits. At 40 times earnings, that would give Nvidia a $6 trillion market cap, pricing the stock at just shy of $250 per share.
That's strong growth, and would make Nvidia a market-beating stock at that price. As a result, I'm still confident that Nvidia is a top stock to buy now.
