Nvidia (NVDA +5.93%) has been one of the top stocks to own since about 2023. It has been on an incredible run, taking it from a $350 billion company to the world's largest, with a value of approximately $4.1 trillion at the time of writing. With a run-up like that, investors would be forgiven if they assumed that there wasn't any upside left. However, the actions from some of the world's smartest investors say otherwise.
Two billionaire hedge fund managers, Daniel Loeb of Third Point and David Tepper of Appaloosa Management, each purchased shares of Nvidia during Q2. Some of the most brilliant minds in the world work for these firms, so when they are still purchasing shares of a company that has risen as much as Nvidia, investors should pay attention.
Although Nvidia has had an impressive two-and-a-half-year run, the future is still bright, and investors would be wise to continue purchasing shares of Nvidia alongside these billionaire investors.
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Global data center spend is expected to explode in the next few years
Nvidia makes graphics processing units (GPUs), which have a unique attribute that allows them to excel in computing arduous tasks. GPUs can process multiple calculations in parallel, an effect that can be multiplied by connecting several GPUs in clusters. This combination creates the most advanced computing technology we have access to, and is useful for various applications, including drug discovery, engineering simulations, cryptocurrency mining, and its most widespread use: artificial intelligence (AI) training and inference.
NASDAQ: NVDA
Key Data Points
Even though many of Nvidia's largest clients have spent billions on building data centers filled with thousands of GPUs, Nvidia expects this total to continue rising rapidly. For 2025, Nvidia expects the largest four AI hyperscalers to spend around $600 billion on data centers. That figure is expected to rise to $3 trillion to $4 trillion by 2030, when all potential clients worldwide are included. That's monster demand for AI computing power, and Nvidia is slated to capture a large chunk of that market.
If this market pans out like Nvidia expects, it's a no-brainer buy at this price point, as the upside for its stock is immense.
Nvidia stock will be a must-own if projections pan out
For FY 2026 (ending January 2026), Wall Street analysts expect Nvidia to generate $206 billion in revenue. With Nvidia's estimated $600 billion in total data center spending, it's safe to say that Nvidia receives about a third of all data center spending. That indicates that by 2030, should Nvidia's market projection pan out, it could generate anywhere from $1 trillion to $1.3 trillion in revenue.
That would translate into a compounded annual growth rate (CAGR) of 37% at the low end of its projection. Considering that the broader market usually returns around 10% annually, Nvidia would not just outperform the market; it would absolutely crush it. That alone makes Nvidia a stock worth considering right now, as it's rare to find any company that can deliver nearly 40% annual returns over five years.
Even if the market turns out to be half the size Nvidia projects, that would still indicate a CAGR of 19%, which is impressive over four years.
I doubt Nvidia's market projection is off that much, as the demand for GPUs outstrips supply. As a result, Nvidia's largest clients are likely in contact about what they plan to spend on GPUs in the years to come, ensuring that the models they want to install in their data centers, which can take years to construct, are available when needed.
Despite Nvidia's impressive run, I believe it still has room for upside based on the massive spending required for AI computing infrastructure. Billionaires are still buying and holding Nvidia stock, giving individual investors a cue that Nvidia's run is far from over.
