NVIDIA (NVDA) has evolved into one of the most valuable companies globally, leading many investors to ponder whether it still possesses substantial growth potential in the future. Judging from its current business layout and industry trends, the answer appears to be affirmative. The company is far more than just a graphics processing unit (GPU) manufacturer; it has built a critical ecosystem that supports the entire artificial intelligence infrastructure.
Its core strength begins with the CUDA software platform, which enables its chips to be flexibly programmed for a wider range of applications beyond graphics rendering. In its early development stages, NVIDIA wisely offered CUDA for free to universities and research labs. This directly led to the vast majority of foundational AI code being developed based on its software ecosystem and optimized for its hardware. Due to the high costs associated with code migration and developer retraining, this strategy has created a solid competitive moat for the company, reflected in its approximately 90% market share in GPUs and the leap in data center revenue from $10.3 billion two years ago to $41.1 billion.
NVIDIA’s moat is not limited to software. Through the development of its NVLink interconnect technology, multiple GPUs can operate as an integrated unit, which limits customers’ ability to mix and use chips from other vendors in AI clusters. Furthermore, the company’s acquisition of Mellanox in 2020 further secured critical networking components, enabling it to provide end-to-end AI solutions from computing to networking. Its data networking revenue nearly doubled to $7.3 billion last quarter, underscoring the importance of this strategic layout.
The company also strengthens its ecosystem influence through strategic investments. For instance, its $100 billion investment in OpenAI gives it equity in this cutting-edge AI enterprise, while also providing crucial financial support for its key customers to acquire its chips. Although OpenAI also collaborates with other chip companies, NVIDIA is one of the few deeply tied to it through equity relations.
Regarding industry prospects, spending on AI infrastructure shows no signs of slowing down. According to NVIDIA’s estimates, the total addressable market (TAM) for AI hardware and systems is expected to climb from the current approximately $600 billion to $4 trillion in the coming years, and the company is poised to capture a significant share of this market. As for future growth, NVIDIA anticipates that its revenue can maintain a compound annual growth rate (CAGR) of about 50% in the coming years. Market consensus forecasts revenue for this fiscal year (ending January) to be approximately $206.5 billion. At this growth rate, revenue could reach about $465 billion by fiscal year 2028.
Assuming its adjusted operating expenses grow by an average of 7% per quarter, gross margins stabilize around 73%, and a 15% tax rate is applied, then by fiscal year 2029, the company’s adjusted earnings could approach $260 billion. Based on the current 2.45 billion outstanding shares, earnings per share would be approximately $10.50. Estimating a price-to-earnings (P/E) ratio of 25 to 30, the stock price could range between $265 and $315. This suggests that, despite NVIDIA’s stock having risen significantly, it still possesses considerable upside potential over the next two years and beyond.
