Shares of Nvidia (NVDA 0.75%) are flying as soon as once more following a tough begin to the 12 months. The semiconductor big’s inventory jumped 42% prior to now three months, simply crushing the 15% features clocked by the S&P 500 index throughout this era.
So, anybody who purchased Nvidia inventory whereas it was sliding earlier in 2025 should be sitting on good features proper now. Nonetheless, if you’re a kind of who missed out on Nvidia’s spectacular rally, you possibly can nonetheless take into account shopping for it proper now, as there’s a good probability that it may double within the subsequent three years. Let us take a look at the the reason why.
Picture supply: Getty Photographs.
Nvidia’s addressable market is getting greater
Funding financial institution Citi has simply raised its value goal on Nvidia to $190 per share, citing Nvidia’s terrific alternative in sovereign synthetic intelligence (AI) infrastructure (i.e., government-related AI). Citi analysts mentioned that the demand for sovereign AI infrastructure is already contributing “billions of {dollars}” in income for Nvidia in 2025.
Importantly, Citi analysts say this enterprise phase is anticipated to ramp up additional because the chip big is concerned in almost each deal for constructing sovereign AI infrastructure. Nvidia struck agreements with a number of European nations, together with the U.Ok., France, Italy, and Germany, to deploy its Blackwell AI graphics processing models (GPUs) to assist them create an AI ecosystem in order that they will “strengthen digital sovereignty, assist financial progress and place the continent as a pacesetter within the AI industrial revolution,” in response to a launch from Nvidia.
Alternatively, Nvidia’s sovereign enterprise can also be gaining traction within the Center East. From Saudi Arabia to Qatar to the U.A.E., the demand for Nvidia’s AI accelerators is booming in these markets. In reality, Nvidia factors out that it’s serving to within the rollout of sovereign AI infrastructure throughout 5 continents, together with South America, Asia, and Africa.
Not surprisingly, Financial institution of America estimates that the sovereign AI infrastructure market may generate annual income of $50 billion in the long term. Nvidia’s relationships with international locations throughout the globe counsel that it’s effectively positioned to nook a pleasant chunk of this sizable alternative. As such, it’s straightforward to see why Citi is forecasting Nvidia’s knowledge middle income to extend by 5% in fiscal 2027, adopted by an 11% bounce in fiscal 2028.
Gross sales of knowledge middle networking chips, alternatively, are forecast to extend by 12% within the subsequent fiscal 12 months and 27% within the one after. Nonetheless, do not be shocked to see this enterprise rising at a quicker tempo. In spite of everything, Citi estimates a complete addressable market (TAM) value $563 billion for AI compute chips by 2028, with one other $119 billion coming from AI networking chips.
Nvidia’s knowledge middle income stood at $115 billion in fiscal 2025 (which led to February this 12 months), rising by a formidable 142% from the prior 12 months. On condition that Nvidia is the dominant participant within the knowledge middle compute market and is gaining traction in networking chips as effectively, it will not be shocking to see its knowledge middle income exceeding analysts’ expectations going ahead.
Strong knowledge middle progress may assist the inventory double
Nvidia managed an estimated 92% of the AI knowledge middle GPU market final 12 months. Even when its market share drops to 50% within the subsequent three years, the corporate’s income from gross sales of AI chips may hit $280 billion (based mostly on the $563 billion end-market alternative identified above). That may be greater than double the corporate’s knowledge middle income in fiscal 2025.
Nvidia’s income from the non-data middle enterprise stood at $15 billion final 12 months. The great half is that the corporate sees wholesome progress in markets akin to gaming, which opens the potential of an uptick within the firm’s non-data middle enterprise as effectively. However even when we assume that Nvidia’s income from the non-data middle enterprise grows to $20 billion after three years and hits $280 billion in income from promoting knowledge middle chips, its high line may bounce to $300 billion.
Nvidia inventory trades at simply over 26 instances gross sales. It could preserve this premium a number of after three years, contemplating that its high line may greater than double from final 12 months’s studying of $130.5 billion, rising at an annual fee of 32%. One more reason why Nvidia can proceed to sport a premium valuation is that it’s unlikely to lose a number of share within the AI chip market due to its management over the availability chain.
A gross sales a number of of 26 and a projected high line of $300 billion may take Nvidia’s market cap to $7.8 trillion, which is nearly double its present market cap. Traders, subsequently, can nonetheless take into account shopping for this AI inventory hand over fist because it appears able to hovering larger.
Financial institution of America is an promoting accomplice of Motley Idiot Cash. Citigroup is an promoting accomplice of Motley Idiot Cash. Harsh Chauhan has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Financial institution of America and Nvidia. The Motley Idiot has a disclosure coverage.
