Where will Nvidia be in 3 years?

Nvidiahis (NVDA 1.46%) the stock has been a big winner over the past three years as the company is the biggest early beneficiary of the development of artificial intelligence (AI) infrastructure. The question, though, is where will the stock end up after such a big run?

Let’s look at how Nvidia gained its dominant position and where the stock may be headed in the next three years.

A few smart moves and a bit of luck

Nvidia’s first ties were with the video game industry, where it developed graphics processing units (GPUs) to accelerate graphics rendering in video games. The company became a leader in the space, and in 2006, created a free software platform called CUDA to allow programmers to program their chips directly. With Nvidia leading the way in this large but rather niche space, developers have generally been taught to program GPUs using Nvidia’s CUDA software.

Eventually, GPUs began to spread to other applications given their powerful computing power. They have started to be used in the automotive space as well as cryptocurrency mining. Nvidia has been talking about AI in the data center space for a while, and its acquisition of networking company Mellanox in 2020 pushed it even further into the data center space.

However, last year ChatGPT helped bring AI into the mainstream and MicrosoftHis increased investment and partnership with its OpenAI creator subsequently sparked an arms race for AI infrastructure. GPUs became the backbone of the AI ​​infrastructure needed to train large language models (LLMs) and run AI inference, and Nvidia happened to be the world’s leading GPU company.

Image source: Getty Images.

Moving forward

While Nvidia may not have predicted the sudden explosion in demand for AI-related GPUs, it positioned itself as an AI leader in the data space well ahead of time. It also created a wide moat for GPUs with its software platform many years ago. Since developers were trained using its software, it takes time and becomes expensive to retrain developers to use software from competitors.

This, along with continued innovation, should help Nvidia maintain its dominance in the GPU space. The company is accelerating its development cycle, reducing it from two years to just one year now. Although there has been a delay, the company’s new Blackwell architecture should start shipping at the end of the calendar year or early 2025. Meanwhile, it has already announced the new Rubin architecture, which it plans to launch in 2026.

This increased innovation cycle should help Nvidia maintain its technology lead and maintain its pricing power.

From there, it’s mostly about demand and how many chips Nvidia can provide. On the demand side, it appears that the development of AI infrastructure is still in its infancy, with cloud computing and other large technology companies increasing all AI-related capital expenditures (capex).

both Meta platforms and Alphabet acknowledged that there is more risk in under-investing in AI capability than over-investing, while Meta also noted that its Llama 4 LLM will likely need 10 times the computing power of Llama 3. Meanwhile, the computing power required for more advanced LLMs should only increase. This means that more GPUs will be needed in the future.

Where the stock can go in 3 years

Nvidia’s revenue growth will slow from the triple-digit pace at which it has grown recently. However, given the strong demand for Nvidia’s chips and the spending commentary from big customers, it seems plausible that the company will grow its revenue by 30% to 50% per year over the next three years. With analysts projecting revenue for fiscal 2025 (ending January) to be around $121 billion, that would equate to fiscal 2028 (basically 2027, as it ends January 2028) revenue of $330 billion of dollars, projecting revenue growth of 50% next year, 40% the year after and 30% in fiscal 2028.

If the company’s adjusted operating expenses grew an average of 13% quarter-over-quarter through fiscal 2028 (similar to last quarter’s sequential growth) at a 20% tax rate on operating income, Nvidia would generate annual revenue of approximately $166 billion, or $6.76. per share, until fiscal year 2028.

The data above is based on the author’s hypothetical projections, which are above analyst consensus estimates for FY2026 to FY2028. Actual future results may vary.

With slower growth, Nvidia’s price-to-earnings (P/E) ratio would fall. However, if it were to grow revenue by 30% in fiscal 2028, a 30 to 40 times multiple on the stock in 2027 would seem reasonable. That would value the stock between $200 and $270 per share in three years. As such, there’s a good chance Nvidia stock will double again from where it is now in three years.