Nvidia Future Growth Potential: Where Will Be the Stock in 3 Years?

Nvidia investors have seen remarkable returns over the past three years thanks to the company’s impressive growth in both revenue and earnings. During this period, Nvidia’s stock has surged by an astounding 576%, turning a $1,000 investment into over $6,750. This growth trajectory appears poised to continue, driven by the burgeoning demand for Nvidia’s artificial intelligence (AI) chips.

Unprecedented Demand for AI Chips

In the first quarter of fiscal 2025, ending April 28, Nvidia’s revenue skyrocketed by 262% year-over-year to a record $26 billion. Non-GAAP earnings per share jumped 461% to $6.12, exceeding market expectations. Nvidia’s revenue guidance for the current quarter is $28 billion, doubling from the previous year’s $13.5 billion.

Despite the current generation of Hopper AI chips nearing replacement by the new Blackwell generation, demand remains robust. The company increased the supply of the previous generation H100 GPU to meet market needs, yet the demand for the new H200 processor still outstripped supply. Nvidia expects the upcoming Blackwell chips also to see demand exceeding supply well into the following year.

Dominance in the AI Chip Market

Nvidia’s dominance in the AI chip market is clear, with an estimated market share exceeding 95%. The company’s foundry partner, TSMC, is expanding its advanced chip packaging capacity at an annual rate of 60% through 2026, which should help Nvidia meet the soaring demand. This expansion is crucial, as the AI chip market is projected to generate annual revenue of $400 billion by 2027, up from $45 billion last year.

Sustained Growth Ahead

The market for AI chips is set to explode over the next three years and Nvidia’s commanding market share positions it to capitalize on this growth. Nvidia ended the previous fiscal year with just under $61 billion in revenue. Analysts forecast that its revenue could nearly triple over the next three years, with some expecting even faster growth by 2027.

Investment Outlook

Given Nvidia’s anticipated growth, the stock remains a compelling investment. Currently trading at 42 times forward earnings, in line with the U.S. technology sector’s average price-to-earnings ratio, Nvidia presents a substantial growth opportunity.

Should You Invest in Nvidia Now?

Before making any investment decisions, consider this: While Nvidia is poised for continued growth, The Motley Fool Stock Advisor team has identified other top stocks they believe are better buys. These ten stocks could deliver substantial returns in the coming years.

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Investing in Nvidia could still be a smart move, but exploring all options and diversifying your investments is always wise.