Does $ 50,000 invested in NVIDIA shares are worth $ 1 million in 10 years?

Nvidia (Nvda 1.26%)) Has been the cornerstone of artificial intelligence trade (AI) for several years. Its share price has increased by 850% since January 2023, a period which coincides roughly with the launch of Chatgpt. But Wall Street is still extremely optimistic about the company of semiconductors.

Angelo Zino at CFRA Research thinks that Nvidia “will be the most important company in our civilization during the next decade”. More broadly, among 73 analysts following NVIDIA, the median target price of 12 months is $ 175 per share. This implies 25% of the increase in its current course of $ 140.

Could NVIDIA shares transform $ 50,000 into $ 1 million in the next decade? Here are my thoughts.

The investment thesis for NVIDIA is greater than the fleas ai

What distinguishes Nvidia is vertical integration. The company has more than 90% market share in the data center Graphic processing units (GPU), fleas that accelerate complex workloads such as artificial intelligence (Ai). But the company completes its GPU with adjacent equipment like CpusInterconnects and networking equipment.

NVIDIA also develops software products. The AI ​​company is a series of tools, code libraries and pre-trained models that rationalize the development of AI applications for use cases such as autonomous robots, conversational agents and optimization systems. Cowsterrike Use these tools to feed threat detection capacities on its cybersecurity platform.

Likewise, Omovers is a software platform that supports the development of 3D applications. It also serves as a simulation engine which allows engineers generating synthetic data to develop automatic learning models. Amazon Use the Omverse platform to optimize robots of the warehouse and train train center center.

NVIDIA frequently establishes performance records in MLPERF benchmarks, objective tests that assess AI systems on training And inference workloads. This is an important competitive advantage: Nvidia builds the best AI accelerators on the market. But vertical integration strengthens this advantage by letting the company design systems of whole data centers with the “lowest cost of possession” CEO Jensen Huang.

Grand View Research indicates that spending on the hardware, software and services of AI will increase to 35.9% per year until 2030. Nvidia has a good chance of corresponding this growth rate. Indeed, Wall Street expects the profits to increase 40% per year throughout the financial year ending in January 2027. This makes the revenue of 44 times.

Nvidia is unlikely to transform $ 50,000 into $ 1 million in the next decade

NVIDIA shares are expected to increase 1,900% (20 times) in the next decade to transform $ 50,000 into $ 1 million. The yields of this magnitude are theoretically possible within this period.

In fact, seven actions currently S&P 500 (^ GSPC 1.03%)) Hit this brand in the past decade, as indicated:

• NVIDIA: + 25,700%
• Micro Advanced devices: + 4,980%
• Axon Enterprise: + 2,380%
• Texas Pacific Land: 2110%
• Arista Networks: 1,950%
• Tesla: 1,920%
• Fair Isaac: 1,900%

However, while returns 20 times are theoretically possible, Nvidia has practically no chance of hitting this brand during the next decade. The company is already worth 3.4 billions of dollars, which means that its market value would reach 68 billions of dollars if the action increased 20 times. This seems very unlikely when the entire S&P 500 is only worth 48 billions of dollars today.

However, Nvidia is still a valid investment. The AI ​​will probably be the most transforming technology in history, and the company is well placed to benefit as the demand for infrastructure of AI increases. Potential catalysts include generative AI, autonomous vehicles and humanoid robots. In addition, NVIDIA has a booming software company which can evolve towards an important source of income as these catalysts take shape.