Philip Panaro is the founder and former CEO of Boston Consulting Group (BCG) Platinion, a division of BCG that offers technology consulting services. Panaro told Schwab Network during an interview in November Nvidia (NASDAQ: NVDA) could reach $800 per share by 2030 thanks to its leadership in artificial intelligence (AI) accelerators. This forecast implies an upside of approximately 450% from the current stock price of $145.
Of course, Nvidia is one of the hottest stocks on the market. The stock price has risen more than 900% since the launch of ChatGPT in late 2022 led to an exponential increase in demand for AI infrastructure. The company executed a 10-for-1 stock split earlier this year to offset that price increase, and if Panaro is right, another split could be in the offing.
Start your morning smarter! Wake up with Breakfast news in your inbox every market day. Register for free »
Here’s what investors need to know.
Nvidia has a 98% market share in data center graphics processing units (GPUs), chips used to accelerate complex data center workloads such as training machine learning models and running artificial intelligence applications. One reason for that dominance is superior chip performance. Nvidia regularly achieves the highest scores on the MLPerfs, objective tests that benchmark the capabilities of AI systems.
But there’s another reason why Nvidia accounts for virtually all GPU sales in data centers: It has spent the better part of the last two decades building an extensive software ecosystem. In 2006, Nvidia introduced its CUDA programming model, a platform that now includes hundreds of code libraries and pre-trained models that streamline the development of AI applications for use cases ranging from autonomous cars and robots to conversational agents and drug discovery.
In addition, Nvidia has branched out into other hardware verticals, such as central processing units (CPUs) and networking equipment. Indeed, Nvidia has a leading position in InfiniBand networking, currently the most popular connectivity technology for back-end AI networks. The ability to integrate hardware components into a cohesive computing system allows Nvidia to build data centers with the lowest total cost of ownership, said CEO Jensen Huang.
Here’s the big picture: Competing with Nvidia is extremely difficult. The GPUs are not only the fastest AI accelerators on the market, but are also supported by the most robust software development platform. And Nvidia has another important advantage in vertical integration. Although the company has more pricing power than its competitors, Nvidia systems are therefore less expensive when it comes to direct and indirect costs.
Looking ahead, sales of AI accelerators are expected to grow 29% annually through 2030, and the broader market for AI hardware, software and services is expected to grow 37% annually over that period. Nvidia may be the company best positioned to benefit from that spending.
Wall Street expects Nvidia’s adjusted earnings to rise 52% annually through fiscal 2026, which ends in January 2026. That consensus estimate makes the current price-to-earnings (P/E) ratio of 54 seem quite reasonable. These numbers give Nvidia a price-to-earnings-growth ratio (PEG) of just above 1, the threshold at which conventional wisdom says a stock is undervalued.
In practice, not many high-growth technology companies have a PEG ratio close to 1, and values between 1 and 2 are often accepted as reasonable. To illustrate why Nvidia appears reasonably priced despite big price gains over the past two years, I’ve listed the current PEG ratios for other popular AI stocks. Each value was calculated in the same way.
Despite being reasonably priced, I’m skeptical that Nvidia will reach $800 per share by 2030. Earnings will almost certainly grow more slowly by then, meaning the price-to-earnings ratio will likely shrink significantly. However, I believe there is still upside in this stock for patient investors.
Consider the following before buying shares in Nvidia:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $872,947!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns December 2, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon, Nvidia, Palantir Technologies and Tesla. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
1 Stock-Split AI Stocks to Buy Before They Surge 450%, According to a Wall Street Expert, originally published by The Motley Fool
