There is no question that Nvidia has been among the market’s top performers in past years. Over the last three years, the stock has more than tripled — and that is not only a recent phenomenon. During the most recent five and 10-year time frames, the stock has went up by 1,280% and 5,110%.
So the question is, can Nvidia continue this winning streak or is the boat already gone? The truth is, I believe Nvidia can reach beyond a trillion-dollar value by 2025. Here’s why.
Gaming and cloud
Nvidia’s dominance in gaming is incredible. The company has a 81% share of the GPU market and is the product chosen by hardcore gamers.
In its fiscal 2022 Q1, Nvidia spent $1.15 billion — over 20% of its overall revenue and 31% of its gross profit — on more R&D. The firm is that serious about keeping its tech advantage.
Nvidia’s financial numbers reveal its strategy is good. The company gave a record gaming revenue of $2.76 billion from Q1, up 106% y/y.
Gaming is 49% of Nvidia’s current revenue.
While this is the largest sector of Nvidia’s business, the company’s cloud segment is quickly catching up. The GPU’s power is in parallel processing — which allows it to run lots of complex computations at the same time. This works really well in routing information through data center at fast speeds.
Nvidia’s numbers tell the results. The company brought in record data center revenue of $2.05 billion in Q1, up 79% y/y, and accounting for 36% of its overall sales.
Other growth triggers
The one-two of cloud and gaming is reason enough to buy Nvidia stock, but the company has other things going on. Autonomous driving being one technology that needs processing done very quickly.
While its auto sector is currently only 4% of the company’s revenue, a breakthrough in self-driving tech might be a major trigger to push Nvidia to the next level.
Current value — $480 billion
There are no guarantees that Nvidia will reach the golden $1 trillion value. With a current cap of only $480 billion (as of this writing) this semiconductor company is at the halfway point for now.
But Nvidia has all the right ingredients to seize its place as one of the most valuable companies in the world. I believe it is only a matter of time.
Author: Steven Sinclaire