Where Will Artificial Intelligence (AI) Leader Nvidia Be in 5 Years?

Chip and data center specialist Nvidia (NASDAQ: NVDA) has emerged as the king of the artificial intelligence (AI) realm. Quarter after quarter, the company continues to defy expectations, set revenue and profit records, and provide investors with a laundry list of such good news that it's hard to keep track of it all.

If you've held Nvidia stock at any point during the last two years, congratulations. You've probably made a lot of money.

But as I often express in my pieces, investors need to think long term. Can Nvidia's rocket ship keep climbing higher?

Below, I'll outline catalysts and risk factors facing Nvidia. Moreover, I'll detail how I think these points can impact the stock and assess how Nvidia shares may hold up over the next five years.

The next couple of years look great, but...

One of Nvidia's best-selling products at the moment is its H100 graphics processing unit (GPU). Meta Platforms CEO Mark Zuckerberg and Tesla CEO Elon Musk have both specifically referenced the importance of the H100 technology for their respective businesses' generative AI development.

Yet, despite the unrelenting demand for the H100, Nvidia is already on the brink of a successor chipset. The company's new Blackwell GPUs are set to launch later this year, and both Wall Street and Nvidia's own management are forecasting billions of additional dollars in sales by the end of the year.

Furthermore, continued heavy spending on capital expenditures (capex) from the likes of Meta, Tesla, Microsoft, Amazon, and Alphabet should serve as a nice tailwind for Nvidia's compute and networking business.

With all that in mind, Nvidia stock could be poised to see further gains over the next couple of years once Blackwell really hits its stride.

The longer-term picture is cloudy

One important detail to call out regarding more capex spending from big tech is that not all of this will be allocated toward Nvidia's products. Rather, each of the "Magnificent Seven" members highlighted above is working on their own in-house custom chip designs. In other words, Nvidia's own customers are looking to compete with the company and move away from a sweeping overreliance on its IT infrastructure.

Such a dynamic will likely be a headwind for Nvidia in terms of its pricing power. I suspect lower prices for Nvidia's GPUs will begin eating away at its revenue growth and gross profit margins. As revenue growth begins to normalize and margins start to shrink, Nvidia's profitability profile will tighten.