Nvidia Stock May Double in the Next 3 Years. Here's Why.
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S of Nvidia (NVDA 1. 27%) are flying once again ing a difficult start to the year. The semiconductor giant's stock jumped 42% in the past three months, easily crushing...
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July 11, 2025
04:45 AM
The Motley Fool
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S of Nvidia (NVDA 1. 27%) are flying once again ing a difficult start to the year
The semiconductor giant's stock jumped 42% in the past three months, easily crushing the 15% gains clocked by the S&P 500 index during this period
So, anyone who bought Nvidia stock while it was sliding earlier in 2025 must be sitting on nice gains right now
However, if you are one of those who missed out on Nvidia's impressive rally, you can still consider buying it right now, as there is a good chance that it could double in the next three years
Let's look at the reasons why
Image source: Getty Images
Nvidia's addressable market is getting bigger Investment bank Citi has just raised its price target on Nvidia to $190 per, citing Nvidia's terrific opportunity in sovereign artificial intelligence (AI) infrastructure (i. , government-related AI)
Citi analysts said that the demand for sovereign AI infrastructure is already contributing "billions of dollars" in revenue for Nvidia in 2025
Importantly, Citi analysts say this segment is expected to ramp up further as the chip giant is involved in nearly every deal for building sovereign AI infrastructure
Nvidia struck agreements with several European nations, including the U. , France, Italy, and Germany, to deploy its Blackwell AI graphics cessing units (GPUs) to help them create an AI ecosystem so that they can "strengthen digital sovereignty, support economic growth and position the continent as a leader in the AI industrial revolution," according to a release from Nvidia
On the other hand, Nvidia's sovereign is also gaining traction in the Middle East
From Saudi Arabia to Qatar to the U. , the demand for Nvidia's AI accelerators is booming in these
In fact, Nvidia points out that it is helping in the rollout of sovereign AI infrastructure across five continents, including South America, Asia, and Africa
Not surprisingly, Bank of America estimates that the sovereign AI infrastructure market could generate annual revenue of $50 billion in the long run
Nvidia's relationships with countries across the globe suggest that it is well placed to corner a nice chunk of this sizable opportunity
As such, it is easy to see why Citi is forecasting Nvidia's data center revenue to increase by 5% in fiscal 2027, ed by an 11% jump in fiscal 2028
Sales of data center networking chips, on the other hand, are forecast to increase by 12% in the next fiscal year and 27% in the one after
However, don't be surprised to see this growing at a faster pace
After all, Citi estimates a total addressable market (TAM) worth $563 billion for AI compute chips by 2028, with another $119 billion coming from AI networking chips
Nvidia's data center revenue stood at $115 billion in fiscal 2025 (which in February this year), growing by an impressive 142% from the prior year
Given that Nvidia is the dominant player in the data center compute market and is gaining traction in networking chips as well, it won't be surprising to see its data center revenue exceeding analysts' expectations going forward
Solid data center growth could help the stock double Nvidia controlled an estimated 92% of the AI data center GPU market last year
Even if its market drops to 50% in the next three years, the company's revenue from sales of AI chips could hit $280 billion (based on the $563 billion end-market opportunity pointed out above)
That would be more than double the company's data center revenue in fiscal 2025
Nvidia's revenue from the non-data center stood at $15 billion last year
The good part is that the company sees healthy growth in such as gaming, which opens the possibility of an uptick in the company's non-data center as well
But even if we assume that Nvidia's revenue from the non-data center grows to $20 billion after three years and hits $280 billion in revenue from selling data center chips, its top line could jump to $300 billion
Nvidia stock trades at just over 26 times sales
It can maintain this premium multiple after three years, considering that its top line could more than double from last year's reading of $130. 5 billion, growing at an annual rate of 32%
Another reason why Nvidia can continue to sport a premium valuation is that it is unly to lose a lot of in the AI chip market because of its control over the supply chain
A sales multiple of 26 and a jected top line of $300 billion could take Nvidia's market cap to $7. 8 trillion, which is just double its current market cap
Investors, therefore, can still consider buying this AI stock hand over fist as it seems capable of soaring higher
Bank of America is an advertising partner of Motley Fool Money
Citigroup is an advertising partner of Motley Fool Money
Harsh Chauhan has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Bank of America and Nvidia
The Motley Fool has a disclosure policy.
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