This stock-split artificial intelligence (AI) stock could become a $10 trillion company by 2030, according to a Wall Street analyst.

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Nvidia (NASDAQ: NVDA ) The early stages of the rise of artificial intelligence (AI) have benefited greatly. Shares have risen 800% since ChatGPT's launch in late 2022, and Nvidia recently hit $3 trillion in market capitalization. apple As the second largest public company.

Nvidia implemented a 10-for-1 stock split last Friday to bring its share price to a more reasonable level, but Wall Street remains very bullish. Of the 62 analysts following Nvidia, 90% rate the stock a buy and 10% rate the stock a hold. No analyst recommends selling at this time.

Additionally, I/O Fund's lead tech analyst, Beth Kendig, recently told CNBC that Nvidia could be a $10 trillion company by 2030 due to the “irrepressible momentum” generated by its superior hardware and popular CUDA software. can become

Interestingly, Crazy money Host Jim Cramer made the same prediction in 2021. For Nvidia to become a $10 trillion company by 2030, the stock would need to rise 233%, which equates to a 20% annual return over the next six and a half. The year

Here's what investors should know about Nvidia.

Nvidia has a lasting advantage in its full-stack computing platform.

Nvidia is a leading supplier of data center graphics processing units (GPUs), chips used to accelerate computationally complex workloads such as artificial intelligence (AI) applications. According to IoT Analytics, the company will account for 92% of data center GPU sales in 2023.

Perhaps more importantly, Nvidia GPUs are the gold standard in AI infrastructure. The Wall Street Journal recently reported that “Nvidia's chips dominate all the latest AI systems, giving the company more than 80% market share.” In fact, some analysts estimate that it has a market share of 95%.

What really makes Nvidia strong is its full-stack strategy that includes hardware, software and services. In addition to GPUs, Nvidia provides networking hardware and central processing units (CPUs) purpose-built for AI, as well as subscription software and cloud services that support AI workflows.

A particularly important element of this full-stack strategy is CUDA, a programming model that allows GPUs (originally designed for graphics workloads) to accelerate any computing task. CUDA cements Nvidia's leadership in data center use cases like AI because (1) it runs only on Nvidia chips and (2) no other company offers a comparable software ecosystem for developers.

Today, CUDA spans more than 250 software libraries (application building blocks), and it supports new products such as Nvidia AI Enterprise, a software platform that streamlines AI application development and deployment across use cases. does such as recommender systems, conversational assistants, logistics robots, and autonomous vehicles.

Nvidia benefited from strong demand for AI products in the first quarter.

Nvidia reported exceptional financial results in the first quarter of fiscal 2025 (ended April 28). Revenue grew 262% to $26 billion on strong sales growth in the data center segment driven by unprecedented demand for AI solutions. Meanwhile, non-GAAP net income rose 461 percent to $6.12 per share.

The chart below details Nvidia's first-quarter revenue growth across its core product categories.

Nvidia reported unusually strong first-quarter sales growth in its data center segment, driven by demand for artificial intelligence solutions.

Looking ahead, CFO Colette Kress says “demand may exceed supply in the next year” due to the upcoming launch of Blackwell GPUs, the next generation of Nvidia's AI platform. Blackwell GPUs deliver four times faster AI training and 30 times faster AI inference than previous Hopper architectures.

Nvidia stock is somewhat expensive, but not unreasonably expensive.

The graphics processor market is predicted to grow by 28 percent annually through 2030, and AI spending on hardware, software, and services is expected to grow by 37 percent annually during the same period. This led Nvidia to grow annual earnings by nearly 30% by the end of the decade.

In fact, Wall Street expects the company to grow earnings per share by 31.8% annually over the next three to five years. This estimate makes its current valuation of 71.5 times earnings look a bit expensive, but not unreasonable. In that context, it's possible for Nvidia to become a $10 trillion company by the end of the decade.

Specifically, if earnings grow at a rate of 30% annually through 2030, Nvidia's market capitalization will reach $10 trillion if shares trade at roughly 40 times earnings. That would be a discount to the current multiple, but still a relatively expensive valuation. S&P 500 Average 24.7 times earnings.

Personally, I don't think investors should count on this outcome — a lot will have to go right for Nvidia over the next six and a half years — but I do think that patient, risk-tolerant investors should pay attention to the results. Cars must have a small owner. Position at Nvidia.

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Trevor Genuine has positions in Nvidia. The Motley Fool has positions and recommends Apple and Nvidia. The Motley Fool has a Disclosure Policy.

This stock split artificial intelligence (AI) stock could become a $10 trillion company by 2030, according to a Wall Street analyst, originally published by The Motley Fool.

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