Could Nvidia stock help make you a millionaire?

If you had invested $5,000 in Nvidia (NVDA -1.95%) Ten years ago, your investment would now be worth more than $1.24 million. The chipmaker has created many millionaires thanks to booming sales of its graphics processing units (GPUs) for gaming and data centers.

But with a market capitalization of $2.9 trillion, Nvidia is currently the world’s third-largest publicly traded company behind Apple and Microsoft. Can a new $5,000 investment turn into $1 million again over the next decade?

Image source: Getty Images.

Why did Nvidia’s stock price soar?

Nvidia is the world’s largest manufacturer of discrete GPUs for high-end PCs and servers. The company’s GPUs can be used to process high-end graphics in video games, power photo and video editing software, mine cryptocurrency, and handle complex artificial intelligence (AI) tasks.

Nvidia once made most of its revenue from the PC market, but in recent years its data-center business has outpaced its PC-gaming business as companies rush to upgrade their servers to handle new AI applications. Today, the world’s leading AI companies, including Microsoft, OpenAI and Alphabet’s Google, all use Nvidia chips.

From fiscal year 2014 to fiscal year 2024 (ending in January this year), Nvidia’s revenue grew at a compound annual growth rate (CAGR) of 31%, and its earnings per share (EPS) grew at a compound annual growth rate (CAGR) of 50%. Initially, some of this growth was due to the expansion of its gaming GPU business (aided by the burgeoning cryptocurrency mining market), but ultimately its data center business became the driving force behind growth. As such, Nvidia’s growth accelerated significantly in fiscal year 2024 as the AI ​​market exploded.

Data source: Nvidia. Chart by author.

From fiscal 2022 to fiscal 2024, the share of data center chips in NVIDIA’s revenue doubled from 39% to 78%. This percentage rises to 87% in the first half of fiscal 2025, as the company focuses entirely on AI-oriented data center chips.

What does a bull market or bear market look like for Nvidia?

Bulls say NVIDIA’s growth will continue as market demand for new AI chips outstrips supply. The company’s gross margins have risen from 62% in fiscal 2020 to 72.7% in fiscal 2024, and they believe the company’s gross margins will continue to grow as the company wields nearly unmatched pricing power in a booming market. They also say the stock is reasonably valued at 32 times next year’s earnings.

Bears expect Nvidia’s growth to slow as AI enthusiasm cools, cheaper rivals such as AMD emerge, and tighter export controls curb sales to China. Many of Nvidia’s biggest customers are also developing their own AI accelerator chips to reduce their long-term reliance on the company.

We would also note that Nvidia insiders have sold 10x the shares they bought in the last 12 months, so the company’s share price upside potential may be limited.

Can Nvidia generate enough profits to make someone a billionaire within a decade?

Analysts expect Nvidia’s revenue and EPS to grow at a CAGR of 50% and 56%, respectively, from fiscal 2024 to fiscal 2027. Much of that growth should be driven by the highly hyped generative AI market, which Fortune Business Insights projects will grow at a CAGR of 40% from 2024 to 2032.

If Nvidia lives up to Wall Street expectations and grows EPS at a modest 30% CAGR from FY2027 to FY2035, and still trades at 30 times earnings, the company’s shares could rise 840% to $1,110 and its market cap could reach $27 trillion by 2034.

But even in that bullish best-case scenario, Nvidia would only grow your $5,000 investment to $47,000. To make $1 million again, you’d need to invest about $106,000 today. So if you have that much cash to throw at a single stock, Nvidia could help you become a millionaire, but you probably won’t repeat the gains of the past decade.

In reality, Nvidia’s growth may slow over the next decade as the AI ​​market matures and new competitors dominate. The company’s growth could be hampered by a global recession or other unpredictable macro factors or regulatory headwinds. Investors should keep all of these risks in mind rather than assuming Nvidia’s popular stock will continue its historic rally.