The chipmaker has delivered incredible returns to investors over the past five years, so it’s no surprise that it remains a solid choice going forward.
The past five years have been great for Nvidia (NVDA -4.08%) Investors are banking on the semiconductor specialist’s share price, which has seen an astounding surge thanks to phenomenal sales and profit growth and two powerful catalysts: video games and artificial intelligence (AI).
Just $100 invested in NVIDIA stock five years ago is worth a whopping $2,850 today. The stock’s 2,750% increase over that period dwarfed the 93% increase in the S&P 500 index over the past five years. However, NVIDIA is now the third largest company in the world with a market capitalization of just over $2.9 trillion. Expecting the stock to jump another 25-30x from current levels over the next five years doesn’t seem very reasonable with a market capitalization of a whopping $80 trillion.
For comparison, the global economy was worth an estimated $105 trillion last year, but it’s worth noting that Nvidia still has solid growth engines in place that could keep it at healthy growth levels over the next five years.
In this article, we’ll take a closer look at these catalysts to see how much upside this semiconductor stock could potentially generate over the next five years.
Nvidia’s latest financial results show AI-driven growth continues
On August 28, NVIDIA announced its fiscal second quarter 2025 financial results (the three months ending July 28). The figures exceeded expectations, with revenue up 122% year over year to $30 billion and non-GAAP earnings per share up 152% year over year to $0.68, showing impressive growth.
Wall Street analysts would have agreed on earnings of $0.65 per share on the company’s revenue of $28.7 billion. The good news doesn’t end there: Nvidia now expects third-quarter revenue to be $32.5 billion, beating the consensus estimate of $31.7 billion. This would represent 80% growth year over year.
Yet, despite reporting impressive growth and issuing better-than-expected guidance, the stock is down. However, this slight drop presents an opportunity for investors to buy the stock, as a closer look at the latest quarterly results shows solid growth across all of the company’s businesses.
The data center division, which grew an astounding 154% year-over-year to hit a record high of $26.3 billion in revenue, benefited greatly from strong demand for NVIDIA’s graphics processing units (GPUs) that are being deployed to train and deploy AI models. Notably, customers continue to buy NVIDIA’s Hopper architecture-based GPUs even as the company plans to begin production of its next-generation Blackwell chips next quarter.
As CFO Colette Kress noted during the latest earnings call:
Blackwell’s production ramp is expected to begin in the fourth quarter and continue through fiscal 2026. We expect Blackwell’s revenue to reach several billion dollars in the fourth quarter. Hopper shipments are expected to ramp up in the second half of fiscal 2025.
Hopper supply and availability has improved, and demand for Blackwell platforms far exceeds supply, a situation that is expected to continue into next year.
More importantly, Nvidia believes that next-generation AI models will likely require 10 to 20 times more computing power, suggesting that demand for its data center GPUs could keep growing in the long term: By one estimate, annual revenue from the AI chip market could reach $311 billion in 2029, compared with an estimated $123 billion this year.
Nvidia generated about $49 billion in data center revenue in the first half of the current fiscal year, and has indicated that revenue from this segment could reach about $100 billion by the end of fiscal 2025, which corresponds to 11 months of calendar year 2024. With the overall AI chip market estimated at $123 billion, Nvidia’s share of this market could reach about 80% by the end of this year.
Even if Nvidia’s AI chip share falls to 70% over the next five years due to rising competition, annual data center revenue could reach $217 billion five years from now (based on a total market size of $311 billion). Simply put, Nvidia’s data center revenue could double over the next five years.
Add in the fact that the company’s other businesses are also experiencing healthy growth, and it’s no surprise to see Nvidia become an even bigger company over the next five years: Revenue from its gaming and AI personal computer (PC) division, for example, grew 18% year-over-year to $2.6 billion.
Gaming has been Nvidia’s bread and butter for many years, but now accounts for less than 10% of the company’s revenue. But investors would be wise to look at the bigger picture, as demand for AI PCs is set to soar over the next five years, paving the way for Nvidia to make big money in both gaming and PCs.
Meanwhile, the company’s professional visualization revenue grew 45% year over year to $427 million, driven by increased demand for its digital twin solutions. Kress said in the latest earnings call:
Foxconn, the world’s largest electronics manufacturer, is using NVIDIA Omniverse to enable digital twins of the physical factories that produce NVIDIA Blackwell systems, and several other major global companies, including Mercedes-Benz, have signed multi-year agreements with NVIDIA Omniverse Cloud to build industrial digital twins of their factories.
According to Mordor Intelligence, the digital twin market could generate $131 billion in revenue in 2029, compared to $26 billion this year, another lucrative growth opportunity for Nvidia. Overall, there are multiple reasons why Nvidia could be a solid investment over the next five years.
How much upside can investors expect?
Nvidia’s healthy outlook has led analysts to raise their revenue growth estimates for the company this fiscal year and beyond.
NVDA revenue forecast data for the current fiscal year from YCharts.
Similarly, bottom-line growth expectations have risen.
NVDA EPS forecast data for the current fiscal year from YCharts.
The good news is that NVIDIA is expected to grow annual earnings by 52% over the next five years. The company’s earnings per share forecast for fiscal 2025 is $2.84, but bottom line earnings could jump to $23 per share five years from now. The stock currently trades at 45 times forward earnings. But even if it trades at 29 times discounted forward earnings in line with the Nasdaq-100’s forward earnings (which we use as a proxy for tech stocks) five years from now, the stock could reach $667.
That’s more than a five-fold increase from current levels, suggesting that this AI stock could continue to make investors even more rich over the next five years.
