Spending on artificial intelligence (AI) infrastructure is widely expected to keep rising over the next several years. Leading foundry Taiwan Semiconductor Manufacturing projected that its AI chip revenue growth will climb at a mid-to-high 50% annual clip through 2029, while Ark Invest fund manager Cathie Wood recently forecast that data center capital expenditures (capex) would triple to hit around $1.4 trillion in 2030.
NASDAQ: NVDA
Key Data Points
That all bodes well for AI chip leader Nvidia (NVDA 0.72%), whose graphics processing units (GPUs) are the primary chips used to power AI workloads. Through the help of its CUDA software platform and networking portfolio, the company has taken commanding market share in the AI chip space. In the GPU market, it has about a 90% market share.
Wood sees networking as one of the fastest-growing parts of AI infrastructure, which is also good news for Nvidia. Nvidia's networking portfolio saw its revenue skyrocket 162% last quarter to $8.2 billion, far outpacing its 56% compute revenue growth.
Against that backdrop, let's see where Nvidia's stock could be at the end of 2030.
Image source: Getty Images.
The road to $800 by 2030
Nvidia is projected to generate revenue of $213.4 billion for its recently completed fiscal year, ending in January. If it can produce a 37.5% revenue compound average growth rate through 2031 (essentially its fiscal year 2032 ending in January 2031), its revenue would be around $1.4 trillion. This would be seeing 50% revenue growth next year and stepping down to 25% revenue growth in fiscal 2032.
If the company's adjusted operating expenses rose at an average of 7% quarter over quarter through 2031 (fiscal 2032) and gross margins remained at approximately 73%, and we apply a 15% tax rate on its operating income, Nvidia could generate over $792 billion in adjusted earnings by 2031 (fiscal 2032), or about $32.50 per share at its current share count of 24.3 billion. Place a 20-to-25 forward price-to-earnings ratio on fiscal 2032 projections for the stock, and its share price would be between $650 and $815 in five years at the end of 2030.
Below is a simple model of what its revenue and earnings growth could look like.
| Financial Metric |
FY2027 |
FY2028 |
FY2029 |
FY2030 |
FY2031 |
FY2032 |
|---|---|---|---|---|---|---|
|
Revenue |
$320 billion |
$464 billion |
$699 billion |
$877 billion |
$1.14 trillion |
$1.42 trillion |
|
Revenue growth |
50% |
45% |
40% |
35% |
30% |
25% |
|
Gross profit |
$234 billion |
$339 billion |
$474 billion |
$640 billion |
$832 billion |
$1.04 trillion |
|
Adjusted operating expenses |
$28 billion |
$37 billion |
$48 billion |
$63 billion |
$83 billion |
$109 billion |
|
Operating income |
$206 billion |
$302 billion |
$426 billion |
$577 billion |
$749 billion |
$931 billion |
|
Net income |
$175 billion |
$257 billion |
$362 billion |
$490 billion |
$637 billion |
$792 billion |
|
Earnings per share |
$7.19 |
$10.56 |
$14.90 |
$20.18 |
$26.21 |
$32.58 |
Data source: Author's projections.
Given this potential outlook, Nvidia's stock remains a buy today.
