Shares of Nvidia could rise another 561%, according to a Wall Street analyst

If you invested $100 in Nvidia (NVDA 1.69%) at the start of 2023, you’d now have $830 thanks to the company’s remarkable rise in artificial intelligence (AI)-powered stock. Even so, the stock could jump from about $120 now to about $800 by 2030, according to one analyst.

Phil Panaro, a former senior advisor at the Boston Consulting Group, believes that the continued growth of artificial intelligence and the emergence of Nvidia’s next-generation Blackwell processors could lead to annual revenues of $600 billion by 2030, up from $61 billion in fiscal year 2024.

Let’s look at the catalysts mentioned by Panaro and see if they are strong enough to help Nvidia sustain its phenomenal growth over the long term.

The growing demand for accelerated computing

Nvidia CEO Jensen Huang said on his company’s August earnings conference call that accelerated computing will be a long-term growth driver. Huang said the transition from general-purpose computing — using central processing units (CPUs) — to accelerated computing based on graphics processing units (GPUs) could help reduce computing costs by 90 percent.

Because GPUs accelerate demanding workloads in data centers that would otherwise take longer using CPUs, Nvidia says, accelerated computing is not only faster, but also more sustainable due to its smaller energy footprint.

Huang estimated that “$1 trillion worth of data centers in a few years will all be accelerated computers,” based on their energy efficiency.

Data centers are estimated to account for 1% to 2% of global energy consumption, a figure expected to double by the end of the decade. So the much faster pace of GPUs compared to CPUs is expected to help reduce power consumption in the long run.

Demand for data center accelerators is projected to grow at a compound annual growth rate (CAGR) of 28% over the next five years. And the massive end market that the transition to accelerated computing is likely to create, Huang said, could mean his company is at the start of a phenomenal growth curve.

That’s because Nvidia is the dominant player in the data center GPU market. It reportedly controlled 98% of this space at the end of last year, so it stands to gain a lot from the secular growth of accelerated computing, even if it loses some of that market share.

The outlook for Nvidia’s upcoming Blackwell AI GPUs looks solid, with the company saying that demand is outpacing supply, a trend that will likely continue next year.

Why a $600 billion top line seems achievable

Nvidia’s solid outlook discussed above helps explain why the company’s revenue estimates have received a nice boost for the next three fiscal years.

NVDA revenue estimates; data by YCharts.

As shown in the chart above, Nvidia’s top line is expected to top $207 billion in fiscal 2027, more than three times its revenue in fiscal 2024. The company’s fiscal 2027 will coincide with most of calendar year 2026. So to reach $600 billion in revenue by calendar year 2030 (Nvidia’s 2031 fiscal year), it will need a 30% annual growth rate over a period of four years.

Nvidia serves several fast-growing markets such as AI chips (expected to grow at an annual rate of 41% until 2032), digital twins and cloud gaming, so there’s a good chance it will indeed catch on revenues of 600 billion dollars. calendar year 2030. But it remains to be seen whether that growth translates into the upside potential Panaro predicts for the stock.

Assuming Nvidia reaches $600 billion in sales in 2030, the stock will need to maintain its current price-to-sales (P/S) ratio of 32 to generate 561% returns from that level. That would translate to a market cap of $19.2 trillion, compared to the current level of just under $3 trillion.

If we don’t give Nvidia such a rich sales multiple and assume it trades at a P/S of 8 (in line with the US tech sector average) by 2030, its market cap would grow to $4.8 trillion .

So Nvidia could offer 61% earnings from current levels, assuming it trades at a more reasonable valuation. But if the market decides to continue rewarding the company with a rich multiple due to its healthy growth, there’s a good chance it could deliver a much stronger upside over the long term — and could even come close to Panaro’s ambitious estimate.