Prediction: Nvidia (NVDA) Stock Will Soar Over the Next 10 Years. Here's 1 Reason Why.

My colleague, Adria Cimino, recently predicted that Nvidia (NASDAQ: NVDA) shares, recently trading near $189 per stub, will reach $400 by 2030, only five years from now. I’m bullish on the stock, myself, own a few shares, and expect them to do quite well over the coming decade.

Why do we expect Nvidia to soar over the coming decade? Well, in my view, there are many reasons. A chief one is the continuing growth of artificial intelligence (AI) technology — around the world. Nvidia, with a recent market cap of $4.6 trillion, is a leading semiconductor company, and the chips it designs are critical for AI because they help train AI.

Nvidia seems likely to reap plenty of profits from its AI-enabling chips, but it will likely also profit from some significant investments in other companies, such as fellow chip specialist Intel and its customer OpenAI, owner of chatbot ChatGPT. Nvidia CEO Jensen Huang foresees up to $4 trillion in annual AI infrastructure spending by 2030 and expects Nvidia to reap a lot of that. More currently, Nvidia is seeing around $600 billion in data center spending this year.

So — should you invest in Nvidia? It’s not a crazy idea. Yes, it has averaged annual gains of more than 77% over the past decade, but its stock still doesn’t seem wildly overvalued, considering its torrid growth. Its recent forward-looking price-to-earnings (P/E) ratio of 41.5 isn’t too far from its five-year average of 38.9.

If you invest in Nvidia, don’t assume that you’ll enjoy 77% gains each year. Remember that as companies grow huge, it can be hard for them to keep growing rapidly. Still, I suspect that long-term investors buying some shares of Nvidia today will do well over a decade or more.

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