Generally speaking, Wall Street is heavy on Nvidia (NASDAQ:NVDA) and alphabet (NASDAQ:Google) (NASDAQ:GOOG) These two companies are among those best positioned to benefit from artificial intelligence. However, selected analysts have particularly optimistic price targets.
I/O Fund analyst Beth Kendig believes NVIDIA’s valuation will reach $10 trillion by 2030 as demand for artificial intelligence accelerators increases. This forecast implies an upside of about 200% from the current market value of $3.3 trillion. It also suggests the stock price will be around $405. Analysts at Trefis believe Alphabet could become a $500 stock by 2030 as its self-driving subsidiary Waymo becomes a bigger part of the business. This forecast implies an upside of approximately 190% from the current share price of $172. It also means that the market value is around $6 trillion.
Investors should always consider forecasts with a degree of skepticism. But Nvidia and Alphabet are arguably major players in the burgeoning artificial intelligence market, so both stocks deserve further consideration. Here are the important details.
Nvidia: 200% upside implied
Nvidia graphics processing units (GPUs) are the gold standard in accelerated computing, the field of accelerating complex data center workloads such as artificial intelligence (AI) using specialized hardware and software. Nvidia GPUs are not only the fastest accelerators on the market, they are also backed by a more robust suite of software development tools.
As a result, the company accounts for 98% of data center GPU shipments and has more than 80% market share in AI chips. Nvidia is further strengthening its leadership in accelerated computing with new hardware products such as Grace CPUs and networking solutions. In fact, Nvidia is the market leader in AI networking.
Nvidia reported strong financial results for the second quarter of fiscal 2025 (ending July 2024). Revenue increased 122% to $30 billion, and non-GAAP earnings increased 152% to $0.68 per diluted share. In the short term, Nvidia is giving a big boost to the upcoming launch of its next-generation Blackwell GPUs, which have already been sold out for 12 months.
Additionally, Nvidia sees big opportunities in humanoid robots and physical AI. To elaborate further, generative AI can create text and images, while physical AI can understand, navigate, and interact with the physical world. Straits Research predicts the humanoid robot market will grow 34% annually through 2032, and Nvidia is well-positioned to benefit.
The company sells products for every layer of the robotic computing stack. DGX systems provide supercomputing infrastructure to train models, the Isaac platform provides development tools to build and test robot applications, and Jetson embedded systems provide onboard computing power for robots. . A decision needs to be made.
Wall Street expects Nvidia’s revenue to grow 35% annually over the next three years. If so, the current valuation of 63.5x P/E would seem reasonable. I’m skeptical that the company’s market cap will reach $10 trillion by 2030, but patient investors should be comfortable buying a small position today.
Alphabet: 190% implied increase
Google, an Alphabet subsidiary, is the largest digital advertising company and third largest in the public cloud, and the company is leveraging AI to strengthen its position in both markets. For example, because its leadership in advertising is largely due to its dominance in internet search, Alphabet added generated AI summaries to Google Search to improve the experience. It’s still early days, but CEO Sundar Pichai says usage and satisfaction rates are on the rise.
Similarly, Alphabet introduced more than 500 updates to its machine learning (ML) platform Vertex AI last year, including the ability to develop generative AI applications using Gemini models. Subsequently, Forrester Research and Gartner recognized Google as a leader in AI/ML platforms. This is noteworthy considering that IDC analysts expect AI/ML platforms to be the fastest growing subcategory of cloud services through 2028.
Google accounted for 13% of public cloud infrastructure and platform services spending in the third quarter, while Amazon and Microsoft accounted for 31% and 20%, respectively. But Google has gained 2 percentage points in market share over the past year, and Forrester analyst Mike Gualtieri says it’s a “hyperscaler that’s best positioned for AI.” This portends a further increase in market share in the future.
Alphabet reported encouraging financial results in the third quarter. Revenue rose 15% to $88.2 billion, driven by particularly strong momentum in the cloud computing segment, as well as modest growth in Google Search and YouTube ads. Meanwhile, the company’s operating margin expanded 4 percentage points, and GAAP earnings increased 37% to $2.12 per diluted share.
Going forward, Alphabet has a big opportunity for its self-driving subsidiary Waymo. The company already provides more than 100,000 fully self-driving trips per week in Phoenix, San Francisco, and Los Angeles, and plans to expand to Austin and Atlanta in 2025. Bank of America analyst Justin Post expects Waymo’s sales could reach $75 million this year, but sees a long-term opportunity of $144 billion. I’m watching.
Looking ahead, Wall Street expects Alphabet’s revenue to grow 16% annually over the next three years. Based on this consensus estimate, the current valuation of 23x P/E looks quite reasonable. Similar to my comments about Nvidia, I’m cautiously optimistic that Alphabet will reach $500 per share by 2030. But patient investors should feel comfortable buying a position in this stock today, even if that doesn’t happen.
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Bank of America is an advertising partner of The Motley Fool’s Ascent. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Trevor Jennewine has held positions at Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Bank of America, Microsoft, and Nvidia. The Motley Fool endorses Gartner and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
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