Picking a stock that you think will be trading at $500 or more five years from now is easy if the stock in question is trading at $495 today. However, that's not what I'm focused on. As an investor, I want to own stocks that are going to outperform the market, so I'm looking at companies that have more room to run.
Three that fit that criteria are Nvidia (NVDA 1.46%), Taiwan Semiconductor (TSM 4.55%), and Broadcom (AVGO 1.32%). Nvidia's shares are the lowest priced, trading at about $190, while Taiwan Semiconductor's are the most expensive at about $375, with Broadcom's hovering near $340. However, I think there's a good chance all three will be above $500 per share five years from now, barring any stock splits along the way.
Image source: Getty Images.
AI is the common denominator
All three of these companies occupy incredibly important positions in the AI realm. Nvidia and Broadcom are two of the primary designers of high-end computing units, while Taiwan Semiconductor manufactures logic chips for both of them. Because they are playing in the hardware side of the AI realm, they're experiencing massive growth tailwinds thanks to unprecedented levels of spending on data centers. This will drive huge growth over the next five years.
NASDAQ: NVDA
Key Data Points
Taiwan Semiconductor's management has forecast that its AI-related chip revenue will rise at nearly a 60% compound annual growth rate from 2024 to 2029, while Nvidia believes that global data center capital expenditures will rise to $3 trillion to $4 trillion by 2030. For reference, the big four hyperscalers alone expect to spend $650 billion on capex in 2026.
All of this adds up to stocks that are primed to skyrocket.
Nvidia has a lot of work to do
Taiwan Semiconductor and Broadcom have relatively minor work to do to reach my $500 per share target: They only will need to rise by 33% and 47%, respectively, to hit that level. Indeed, if it takes them five years to reach $500, most investors would be disappointed, as the companies are expected to experience monster growth this year. In fact, the average one-year price target for Broadcom is about $460, while Taiwan Semiconductor's is around $420. Given that, I anticipate both of these stocks will come close to $500 per share within two years, and for sure will surpass that within the next five.
NASDAQ: AVGO
Key Data Points
Nvidia has a lot further to go. To reach $500 per share, it will have to rise by 163%. That seems like it could be a stretch, considering that it's already the world's largest company, with a market cap of more than $4.4 trillion. However, with all of the AI spending that is planned, it's possible. Nvidia estimates that big tech's 2026 data center spend will be $600 billion, while analysts expect the chipmaker to generate $213 billion in revenue this year. Should Nvidia continue to capture one-third of data center spending and that market reaches $3 trillion in five years, as forecast, that could give Nvidia $1 trillion in revenue -- 5 times as much as it is booking today. If that happens, the stock will easily deliver the 163% gains required to reach $500 per share, although I'd expect it to be far higher.
