Nvidia (NVDA 0.25%) has been an outstanding performer on the stock market over the past decade. It's delivered outstanding returns to investors thanks to its consistently solid growth, driven by the rising demand for its graphics cards.
Someone who invested just $100 in Nvidia stock 10 years ago would now be sitting on a position worth over $10,600.
Data by YCharts.
In other words, Nvidia has multiplied investors' wealth by more than 100x in the past decade. Let's take a look at the reasons behind this incredible performance and its growth potential looking ahead.
Nvidia is a much bigger company than it was 10 years ago
Nvidia's chips are now powering various applications ranging from computers and supercomputers to data centers, cars, and digital twins. That's a big departure from 10 years ago when Nvidia was primarily a supplier of graphics cards for personal computers (PCs), and it was looking to cut its teeth in the market for smartphone and tablet processors with its Tegra chip.
It's also worth noting the company had just entered the data center graphics processing unit (GPU) market a decade ago when its Tesla graphics card found its way into a supercomputer. It is now a leading light in the data center chip market thanks to the tremendous demand for its graphics cards that power artificial intelligence (AI) applications.
The success in the data center market has been central to Nvidia's outstanding gains in the past decade. The company generated $10.3 billion in data center revenue in its most recent quarter, a massive number considering its companywide revenue in fiscal 2013 was $4.3 billion. As Nvidia's top line has climbed more than sixfold since then, the company's market cap has surged to $1 trillion.
Investors are now wondering what the next 10 years might look like for Nvidia. Can this high-flying tech giant sustain its recent growth levels and recreate some of the outstanding returns it has delivered to shareholders in the past decade? Let's find out.
The next decade could be even more exciting
Nvidia finished fiscal 2023 (which ended in January this year) with $27.0 billion in revenue. Below, you can see just how quickly analysts expect that figure to increase through fiscal 2026.
Data by YCharts.
Nvidia's top line could jump 3.5x in the space of just three years based on analysts' projections, indicating the company is on track to outpace the growth it has clocked in the past 10 years. Fueling much of that growth is Nvidia's dominant position in the AI chip market.
Citigroup analysts expect Nvidia to command at least a 90% share of the AI chip market because of the technological superiority and early-mover advantage it enjoys over rivals. Meanwhile, analyst Vijay Rakesh of Japanese investment bank Mizuho believes Nvidia could generate a whopping $300 billion in annual revenue from AI alone by 2027, even if it controls a smaller 75% of the AI chip market at that time.
That's a very ambitious forecast as it suggests Nvidia's revenue could jump more tenfold in just four to five years. After all, Nvidia could face increased competition from rivals such as Advanced Micro Devices, which recently claimed that it's witnessing stronger interest in its AI chips. AMD CEO Lisa Su remarked on the company's August earnings call, "AI cluster engagements grew by more than 7 times sequentially as multiple customers initiated or expanded programs supporting future deployments of Instinct MI250 and MI300 hardware and software at scale."
It's worth noting that AMD has been able to improve the performance of its AI accelerators enough to cause Nvidia some worry based on third-party research. This probably explains why AMD's chips have been gaining traction in the market and are being deployed by supercomputers for training large language models that are used for developing generative AI applications. Meanwhile, even Intel has been expanding its pipeline of AI customers.
But at the same time, Nvidia investors should note the company is moving into the territory of its rivals by launching new products it previously lacked. As a result, it won't be surprising to see Nvidia maintaining a dominant share of the AI chip market in the long run.
How much upside can investors expect?
Based on the analyst estimate, Nvidia's revenue could reach $94.9 billion in fiscal 2026, up from $27.0 billion in fiscal 2023. That translates into a three-year compound average growth rate (CAGR) of 52%, a big jump from the 20% CAGR it has clocked in the past decade. Given that Nvidia has multiple powerful catalysts ranging from AI to video gaming and the automotive industry, it is possible the company could clock an even higher growth rate over the next decade than it did in the previous one.
While this AI stock is unlikely to repeat its 100-bagger performance from here, investors can own Nvidia knowing it still has incredible growth potential that can fuel outsized gains over the next 10 years and beyond.
