Nvidia (NVDA +0.14%) is getting closer and closer to setting a new market cap record. It is currently a $5.6 trillion company, placing a $6 trillion market cap within reach by the end of this year. But where will it be by 2028?
Judging by Nvidia's current outlook and valuations, it will reach an unexpected level: I think it can easily breach the $10 trillion mark and go even higher. That makes the stock a no-brainer buy, as it indicates it will double in about two and a quarter years. So, how will it reach a $10 trillion market cap?
Easy: It just needs to hit projections.
Image source: The Motley Fool.
Nvidia is not an expensive stock
Somewhere along the way, Nvidia's stock developed a narrative that it was expensive. While I'll buy that argument from a trailing-earnings standpoint if you rewind to 2024, that's truly not the case right now. Nvidia trades at 29.5 times trailing earnings, which is about where you'd expect a big tech stock to trade. The problem is, Nvidia is no ordinary big tech stock.
NVDA PE Ratio data by YCharts
Nvidia more than doubled its revenue year over year in its most recent quarterly results, and it told investors it expects 70% revenue growth in the next fiscal year. Find another big tech stock that's expecting that kind of growth that isn't valued at this low a level. It's not possible.
Nvidia is actually quite cheap, and despite management telling investors that it's going to grow rapidly next year and several other firms backing that projection, there isn't really any of next year's growth priced into the stock.
NVDA PE Ratio (Forward 1y) data by YCharts
Nvidia trades for nearly 15 times next year's earnings. So even if the stock rallies to 30 times earnings by the end of the year while meeting projections, it would double. That indicates Nvidia's stock will reach a valuation exceeding $10 trillion by the end of the next fiscal year, which ends in January 2028. So, I think it's pretty safe to say that Nvidia will reach a $10 trillion market cap by 2028, and with more growth expected in the artificial intelligence industry through 2030, it will reach even higher levels over the rest of 2028.
NASDAQ: NVDA
Key Data Points
That makes Nvidia one of the best stocks to buy in the market, and if you've got some capital uninvested, now is a perfect time to deploy it to Nvidia.
