Over the past 10 years, Nvidia's stock market has been a top performer. It has earned substantial returns from investors thanks to its consistently solid growth, driven by the rising demand for its graphics cards.
If you invest $100 in Nvidia stock 10 years ago, you would now be on a position worth more than $10,600.
In addition, Nvidia has increased the wealth of investors by more than 100x over the past decade. Let's take a peek at the reasons behind this amazing performance and its growth potential in the future.
10 years ago, Nvidia was a much larger company.
Nvidia's chips are now enabling various applications, including computers, supercomputers, data centers, cars, and digital twins. That's a big departure from 10 years ago when Nvidia was primarily a graphics card manufacturer for personal computers, and it was looking to cut its teeth in the market for smartphone and tablet processors with its Tegra chip.
It's also worth noting that Tesla had just entered the data center graphics processing unit market a decade ago when its Tesla graphics card became a supercomputer. The market for artificial intelligence applications is now a top priority, thanks to the immense demand for its graphics cards that propel it into the top of the data center chip market.
Nvidia's success in the data center market has been a key factor in its remarkable growth over the past decade. In fiscal 2013 the company generated $4.3 billion in revenue from its data center, a significant figure considering the company's gross revenue in fiscal 2013 was $4.3 billion. With a market value exceeding $1 trillion, Nvidia's top line has grown more than sixfold since then.
Nvidia's investors are now looking at what the next 10 years will look like. How can the high-speed tech giant continue to grow and re-create some of the outstanding returns it has delivered to shareholders in the past decade? In fiscal 2023, Nvidia generated $27.0 billion in revenue. Underneath, you can see just how quickly analysts expect that figure to increase through fiscal 2026.
Nvidia's top line could surge 3.5x in the space of just three years, according to analysts, indicating the company is on track to outperform the growth it has clocked in the past 10 years. The growth is Nvidia's dominance in AI chip market, fueling a significant portion of that growth.
Citigroup analysts expect Nvidia to control at least a 90% of the AI chip market, thanks to the technological superiority and early-mover advantage it enjoys over rivals. By 2027, Nvidia could generate a whopping $300 billion in annual revenue from AI alone, even if it controls a smaller 75% of the AI chip market.
It's worth noting that AMD has been able to improve the performance of its AI accelerators enough to cause Nvidia some worry based on third-party research. For generating artificial intelligence applications, the chips of AMD have been gaining traction and are being utilized by supercomputers for learning large language models that are utilized to build generative AI applications. Even Intel has been expanding its AI client list in the past few years.
But at the same time, Nvidia's shares must note that it's moving into the territory of its rivals by launching fresh products that it previously lacked. While Nvidia is still a major player in the AI chip industry, it will not be surprise to see the company maintain a dominant position in the AI chip market for a long time.
In fiscal 2026, Nvidia's revenue could reach $94.9 billion, up from $27.0 billion in fiscal 2023. It translates into a three-year compound average growth rate of 52%, a big jump from the 20 percent CAGR it has clocked in the past decade. With Nvidia's extensive presence of powerful catalysts such as AI, video gaming, and the automotive sector, it is possible that the company could clock an even more substantial growth rate in the next decade than it did in the past.
While this artificial intelligence stock is not likely to repeat its 100-bagger performance here, investors can own Nvidia knowing it still has enormous growth potential that can fuel outsized gains over the next 10 years and beyond.