The artificial intelligence (AI)-fueled surge in shares of Nvidia (NVDA +0.81%) has made it the largest company in the world with a market cap of over $5 trillion.
It has reached this position following a stunning jump of almost 10x in the stock price over the past five years. Investors may now be wondering whether Nvidia can achieve another 10x jump over the next five years, especially given its enormous market cap.
We will take a closer look at Nvidia's prospects and see how much upside investors can expect from this AI stock over the next five years.
Image source: The Motley Fool.
Can Nvidia really jump another 10x?
A 10x jump in Nvidia stock over the next five years will take its market share to $50 trillion. The global gross domestic product (GDP) is anticipated to hit $150 trillion in 2030, according to data from Visual Capitalist, up from $125 trillion last year.
NASDAQ: NVDA
Key Data Points
A 10x jump in Nvidia stock means that it will account for a third of the global GDP after five years, as compared to just 4% right now. That seems quite unlikely. However, Nvidia still has significant room for growth over the next five years, and it trades at an attractive valuation. As a result, there is a good chance the company will deliver solid gains.
For instance, AI infrastructure spending isn't slowing down. Nvidia points out that the annual capital spending by the top five hyperscalers is on track to reach $800 billion this year. The figure is expected to increase to $1.3 trillion in 2027. Importantly, annual data center spending could cross $3 trillion in 2030, according to market research firm Dell'Oro.
The firm points out that a third of this spending, or $1 trillion, will go toward AI accelerators. The networking components to connect those accelerators will add to this addressable market. Nvidia is the biggest player in AI accelerators with an 80% market share. The company is bolstering its presence in this market by entering into lucrative areas, such as server processors.
As such, I won't be surprised to see Nvidia maintaining its dominance in the AI accelerator market after five years. Assuming it can sustain its impressive share of this space, its AI accelerator revenue alone could hit $800 billion (based on the $1 trillion estimate noted in the previous paragraph). That would be a big jump over Nvidia's 2026 data center revenue of $194 billion. It is worth noting that the company also includes sales of networking components in the data center segment, so Nvidia's addressable opportunity could be much larger.
The stock could still become a multibagger
Nvidia's earnings per share could increase at an annual rate of 52% over the long run.
Data by YCharts
What's worth noting is that this estimate has increased substantially this year. Let's assume Nvidia indeed manages to clock 52% annual earnings growth over the next five years; its earnings per share could reach $75.54 (using fiscal 2027's projected earnings per share of $9.31 as the base).
If this AI stock trades at 21 times earnings after five years, in line with the S&P 500 index's forward earnings multiple, its price could jump to $1,586. That's 7.5x Nvidia's current stock price.
Of course, this may seem like a very ambitious estimate. Still, it is evident that Nvidia has the potential to jump significantly over the next five years, even if the stock doesn't multiply by 7x. This makes Nvidia stock an attractive buy right now as it trades at just 24 times forward earnings.
