Where Will Nvidia Stock Be in 2 Years?

Nvidia, the world's largest company, is poised for continued substantial growth, leveraging its dominant position in AI infrastructure with over 90% GPU market share. Its competitive advantages, including the CUDA software platform, NVLink interconnect, and Mellanox acquisition, underpin its end-to-end AI solutions, driving data center revenue to $41.1 billion and data networking revenue to $7.3 billion. The company projects a 50% compound annual revenue growth rate, potentially reaching $465 billion in revenue and $10.50 EPS by fiscal year 2028, indicating significant future upside for investors despite its current valuation.

Analysis

Nvidia maintains a dominant position in the AI infrastructure ecosystem, holding over 90% market share in the GPU space. This dominance is underpinned by its proprietary CUDA software platform, which has led to foundational AI code being optimized for its chips, creating a significant competitive moat. The company's data center revenue surged to $41.1 billion last quarter, up from $10.3 billion two years prior, demonstrating robust growth in this critical segment.

Further strengthening its ecosystem, Nvidia's NVLink interconnect prevents mixing of competitor chips within AI clusters, while the Mellanox acquisition provides end-to-end AI factory capabilities. Data networking revenue nearly doubled to $7.3 billion last quarter, highlighting the success of this integrated strategy. A strategic $100 billion investment in OpenAI also secures a direct stake in a leading AI model developer and customer.

The company projects a 50% compound annual growth rate (CAGR) for revenue over the next few years, targeting $465 billion by fiscal year 2028. Based on this trajectory, with stable gross margins around 73% and controlled operating expenses, Nvidia could generate approximately $260 billion in adjusted earnings, or $10.50 EPS, by fiscal year 2029. This implies a potential share price of $265-$315 within two years, based on a 25x-30x price-to-earnings multiple.

Key Decisions for Investors

• Monitor Nvidia's continued execution on its 50% CAGR revenue guidance and sustained gross margins, as these are critical for achieving projected EPS targets.
• Evaluate the sustainability of its competitive moat, particularly CUDA and NVLink, against emerging alternatives or regulatory pressures in the rapidly evolving AI hardware market.
• Consider the strategic implications of its OpenAI investment, which provides both customer financing and a direct stake in AI model development, as a long-term growth driver.