Nvidia Stock Could Soar Another 561%, According to a Wall Street Analyst

1 week ago

If you invested $100 in Nvidia (NASDAQ: NVDA) at the beginning of 2023, you would now have $830 thanks to the remarkable surge in the company's shares fueled by artificial intelligence (AI). Even so, the stock could jump from about $120 now to around $800 by 2030, according to one analyst.

Phil Panaro, a former senior advisor at the Boston Consulting Group, believes that the continuing growth of AI and the arrival of Nvidia's next-generation Blackwell processors could lead to annual revenue of $600 billion in 2030 from $61 billion in fiscal 2024.

Let's look at the catalysts mentioned by Panaro and check if they are strong enough to help Nvidia sustain its phenomenal growth in the long run.

The increasing demand for accelerated computing

Nvidia CEO Jensen Huang said on his company's August earnings conference call that accelerated computing is going to be a long-term growth driver. Huang said the transition from general-purpose computing -- using central processing units (CPUs) -- to accelerated computing based on graphics processing units (GPUs) could help reduce computing costs by 90%.

Because GPUs speed up demanding workloads in data centers that would have otherwise taken longer using CPUs, Nvidia says, accelerated computing is not only faster, but it is also more sustainable because of its smaller energy footprint.

Huang projected "$1 trillion worth of data centers in a few years will be all accelerated computing" based on their energy efficiency.

Data centers are estimated to account for 1% to 2% of global energy consumption, a figure expected to double by the end of the decade. So the much faster pace of GPUs compared to CPUs is expected to help reduce energy consumption long term.

The demand for data center accelerators is forecast to have a compound annual growth rate (CAGR) of 28% through the next five years. And the massive end market that the transition to accelerated computing is likely to create, Huang said, could mean that his company is at the beginning of a phenomenal growth curve.

That's because Nvidia is the dominant player in the data center GPU market. It reportedly controlled 98% of this space at the end of last year, so it stands to win big from the secular growth in accelerated computing even if it loses some of that market share.

The outlook for Nvidia's upcoming Blackwell AI GPUs seems to be solid, with the company saying demand is tracking ahead of supply, a trend that's likely to continue next year as well.