00:00:00
where will Nvidia stock be in 10 years
00:00:02
I'll provide the bull case and the bear
00:00:04
case for different scenarios extreme
00:00:07
bull to extreme bare we'll also look at
00:00:09
some recent developments from Nvidia
00:00:11
we'll break down Nvidia by Revenue
00:00:13
segment we'll listen to a couple of
00:00:14
clips from CEO Jensen Wong and we'll do
00:00:17
a deep dive into some of the most
00:00:18
important valuation metrics for NVIDIA
00:00:21
as you already know Nvidia has been a
00:00:23
top performer in 2023 gaining more than
00:00:26
194 year-to-date one thousand dollars
00:00:30
invested in Nvidia 10 years ago back in
00:00:32
2013 would be worth over a hundred and
00:00:35
fifteen thousand dollars today but you
00:00:38
don't care about the past you care about
00:00:39
where Nvidia stock is headed so where
00:00:42
will nvidia's stock be in 2033 of course
00:00:45
Nvidia has been on a tear because of
00:00:47
artificial intelligence Ai and Nvidia
00:00:50
has a Winning Edge over its peers in the
00:00:52
AI space and I'm going to show you why
00:00:54
Nvidia Services include AI
00:00:56
supercomputers Algos data processing and
00:00:59
training modules in Nvidia also has an
00:01:01
edge in AI Services across several
00:01:03
Industries and they continue to innovate
00:01:05
this infographic breaks down nvidia's
00:01:07
Revenue worldwide from 2015 to 2023 by
00:01:11
segment Nvidia got its start creating
00:01:13
Hardware Graphics ships for video games
00:01:15
but the company now is much more than
00:01:18
that creating not only AI Hardware but
00:01:20
also AI software for secular growth
00:01:22
trends like robotics autonomous vehicles
00:01:25
artificial intelligence and more and you
00:01:27
can see on your screen you know back in
00:01:29
2017 it was all GPU and really through
00:01:32
2019 it was all GPU in 2020 you start to
00:01:35
see the compute and networking grow and
00:01:37
that green color there is that compute
00:01:39
networking you can see that's become the
00:01:41
largest segment of nvidia's Revenue so
00:01:43
is Nvidia stock going higher you can see
00:01:45
a couple Clips in your screen nvidia's
00:01:47
CPUs control 95 to 100 of the market for
00:01:50
computer training you also see other
00:01:52
statistics online like 90 I'm going to
00:01:55
use 90 as the Assumption because of
00:01:57
explosive growth and AI demand Nvidia
00:01:59
manage management expects data center
00:02:01
sales to register rapid growth
00:02:03
throughout 2023 and this is driven by
00:02:06
that new AI as a service business model
00:02:08
that we've talked about here on the
00:02:10
channel and if you're new here make sure
00:02:11
you subscribe and click the bell for
00:02:13
notifications so you don't miss future
00:02:14
videos like this one and Nvidia has its
00:02:17
hands and lots of other pots as well and
00:02:19
I'll go through some of those here in
00:02:20
this video in addition to working with
00:02:22
every major hyperscale cloud provider we
00:02:25
are engaged with many consumer internet
00:02:27
companies Enterprises and startups the
00:02:29
opportunity is significant in driving
00:02:31
strong growth in the data center that
00:02:33
will accelerate throughout this year
00:02:34
additionally Cloud adoption continues to
00:02:36
accelerate full year data center Revenue
00:02:38
growth was mainly driven by meaningful
00:02:40
Partnerships with cloud services
00:02:42
providers and later in the video I'll
00:02:44
show you a clip of one of those examples
00:02:45
these Cloud Partners continue to
00:02:47
contribute to the segments growth by
00:02:49
offering AI as a service and enabling
00:02:51
access to several Nvidia offerings this
00:02:54
is going to accelerate nvidia's growth
00:02:55
exponentially because it allows Nvidia
00:02:58
to tap into existing custom
00:02:59
relationships with these Partners a
00:03:01
quote from Jensen Wong softwares eating
00:03:04
the world but AI is going to eat
00:03:05
software and there's a picture showing
00:03:07
you what an h100 looks like this is nine
00:03:10
times faster than the
00:03:12
a130x faster the comparative Transformer
00:03:15
based large language models and you may
00:03:17
recall last March on this channel I told
00:03:19
you just how big this was going to be
00:03:24
today we are announcing the Next
00:03:27
Generation
00:03:29
the engine of the world's AI Computing
00:03:31
infrastructure
00:03:33
makes a giant leap this stuff right here
00:03:35
got I'm telling you
00:03:38
as someone who's really into technology
00:03:40
I can just nerd out on this stuff I mean
00:03:43
we are going to a whole nother
00:03:45
Stratosphere when you look at the h100
00:03:48
chips and what these things can do to
00:03:50
put it in perspective
00:03:52
20 h-100s can sustain the equivalent of
00:03:57
the entire world's internet traffic and
00:03:59
Nvidia has been my highest conviction
00:04:01
stock since I went long in 2018. I want
00:04:03
to share with you just how big this
00:04:05
opportunity is so I'm going to show you
00:04:07
a clip from CEO Jensen Wong at his
00:04:10
keynote at GTC 2023 Nvidia accelerated
00:04:13
Computing starts with dgx the world's AI
00:04:17
supercomputer the engine behind the
00:04:19
large language model breakthrough I hand
00:04:21
delivered the world's first dgx to open
00:04:23
AI since then half of the Fortune 100
00:04:27
companies have installed dgx AI
00:04:29
supercomputers dgx has become the
00:04:33
essential instrument of AI the GPU of
00:04:35
dgx is eight h-100 modules h100 has a
00:04:41
Transformer engine designed to process
00:04:43
models like the amazing chat GPT which
00:04:46
stands for generative pre-trained
00:04:49
Transformers
00:04:50
the eight h-100 modules are Envy linked
00:04:53
to each other across Envy link switches
00:04:55
to allow fully non-blocking transactions
00:04:59
the eight h-100s work as one giant GPU
00:05:03
the Computing fabric is one of the most
00:05:05
vital systems of the AI supercomputer
00:05:08
400 gigabits per second ultra low
00:05:11
latency Nvidia Quantum infiniband within
00:05:15
Network processing connects hundreds and
00:05:18
thousands of dgx nodes into an AI
00:05:21
supercomputer
00:05:22
Nvidia dgx h100 is the blueprint for
00:05:26
customers building AI infrastructure
00:05:28
worldwide it is now in full production I
00:05:32
am thrilled that Microsoft announced
00:05:34
Azure is opening private previews to
00:05:37
their h100 AI supercomputer other
00:05:40
systems and cloud services will soon
00:05:43
come from atos AWS Cirrus scale core
00:05:47
weave Dell gigabyte Google hpe Lambda
00:05:52
Lenovo Oracle quanta and super micro
00:05:56
the market for dgx AI supercomputers has
00:06:00
grown significantly
00:06:01
originally used as an AI research
00:06:05
instrument dgx AI supercomputers are
00:06:08
expanding into operations running 24 7
00:06:12
to refine data and process AI
00:06:16
dgx supercomputers are modern AI
00:06:19
factories
00:06:21
we
00:06:22
are at the iPhone moment of AI so we
00:06:25
know that Nvidia is a leader for AI
00:06:27
semiconductors software is the next
00:06:30
phase of growth also Automotive which
00:06:32
really is slept on nvidia's Enterprise
00:06:34
AI software which essentially serves as
00:06:37
the operating system for AI will be very
00:06:39
difficult for competitors to replicate
00:06:41
even if they can match the company's
00:06:43
Hardware it's going to be very difficult
00:06:45
to match this ecosystem they've built
00:06:47
and this will ensure that Nvidia holds a
00:06:49
top position in AI for years to come and
00:06:52
you've seen this stat on the channel
00:06:53
before the Nvidia AI Tam is 600 billion
00:06:56
dollars what many people don't realize
00:06:58
is that only half of that is in Hardware
00:07:00
300 billion dollars that tamus Hardware
00:07:02
the other 300 billion dollars is in
00:07:04
software Nvidia also has an automotive
00:07:06
segment and it's really an early stages
00:07:08
so think about Thomas driving and many
00:07:10
other applications and this is a 300
00:07:13
billion dollar total addressable Market
00:07:14
if you want me to do a deep dive
00:07:16
specifically on this segment drop me a
00:07:18
comment below and let me know and I
00:07:20
mentioned earlier Nvidia has their hands
00:07:22
in lots of different pots there's about
00:07:23
a hundred billion dollars in additional
00:07:25
total addressable Market in those other
00:07:27
segments so if you add all those up one
00:07:30
trillion dollars in total addressable
00:07:32
market so we're trying to predict where
00:07:34
Nvidia stock is going to be in 10 years
00:07:36
so let's look at the previous 10 years
00:07:38
so 10 years ago Nvidia finished their
00:07:41
fiscal 2013 with revenue of only 4.28
00:07:44
billion dollars and in fiscal 2023
00:07:47
essentially 2022 the company's Top Line
00:07:50
reached nearly 27 billion so nvidia's
00:07:53
Revenue has multiplied six-fold in the
00:07:55
past 10 years but this is all before the
00:07:57
AI acceleration think of Nvidia as a new
00:08:00
business it's a completely different
00:08:02
business than it was in 2013. so the
00:08:05
historical information is not really all
00:08:07
that relevant AI is a game changer so
00:08:10
let's look at gpus statistics show that
00:08:13
Nvidia controls over 90 percent of the
00:08:15
market for Enterprise gpus that are
00:08:18
deployed in data centers super computers
00:08:19
and cloud computing the global CPU
00:08:22
Market is expect to expand tenfold so
00:08:24
10x over the next decade generating 400
00:08:27
billion dollars in Revenue in 2032
00:08:29
compared to 40 billion dollars last year
00:08:32
now this data was from last year and
00:08:34
I've seen estimates that are much higher
00:08:35
than 400 billion dollars looking out to
00:08:37
2032. I've seen numbers ranging from 500
00:08:40
billion to a trillion plus but we're
00:08:42
going to use 400 billion dollars to be
00:08:45
conservative and we're going to use 2033
00:08:47
so even a year longer than what this
00:08:49
stat has shown us so nvidia's revenue of
00:08:51
27 billion dollars per fiscal year 2023.
00:08:54
now fiscal year ended on January 29th of
00:08:58
this year suggests that the company
00:08:59
controls more than two-thirds of the
00:09:02
space next let's look at software as a
00:09:04
service back in 2022 on their investor
00:09:07
day Nvidia mentioned that it's recurring
00:09:09
software and services Revenue are
00:09:10
currently at an annual run rate in the
00:09:12
low hundreds of millions this implies
00:09:14
that nvidia's current software revenue
00:09:16
is less than two percent of Top Line in
00:09:19
nvidia's high margin software Revenue as
00:09:21
a percentage of total sales could
00:09:23
potentially rise from those low single
00:09:25
digits to the High Teens over the next
00:09:27
10 years this will help drive an
00:09:30
increase in nvidia's overall profit
00:09:31
margins for the next decade and of
00:09:33
course higher profit margins help
00:09:35
support a higher valuation I mentioned
00:09:37
earlier about nvidia's Partnerships in
00:09:40
nvidia's partnering not only with the
00:09:41
large hyperscalers like with the Amazon
00:09:43
web services the Google Cloud platforms
00:09:45
the Microsoft azures and so on but also
00:09:48
companies like snowflake to bring AI to
00:09:51
existing customers and this will
00:09:52
accelerate growth and adoption check out
00:09:55
this clip from nvidia's CEO Jensen Wong
00:09:57
at the snowflake Summit with snowflake
00:09:59
CEO Frank slootman and for the very
00:10:01
first time if you date a warehouse we're
00:10:04
going to connect the AI Factory next to
00:10:06
it and you're going to be producing
00:10:08
intelligence the most valuable commodity
00:10:11
the world's ever produced you are
00:10:14
sitting on a gold mine of Natural
00:10:16
Resources your company's data
00:10:18
proprietary data we're now going to
00:10:21
connect it to an AI engine
00:10:23
and you're going to on the other end of
00:10:25
that is just intelligence spewing out
00:10:27
every single day
00:10:29
unbelievable amounts of Intelligence
00:10:31
coming out the other end even while you
00:10:33
sleep
00:10:34
this is the best thing ever so if you're
00:10:37
if you're a snowflake customer as many
00:10:40
many are
00:10:42
Frank and I are going to help you
00:10:44
turn your data into intelligence next
00:10:46
let's look at some charts that I put
00:10:48
together looking at valuation metrics
00:10:50
not only historic metrics but also
00:10:52
forward metrics like Ford PE and then
00:10:54
I'll provide you with four scenarios of
00:10:57
where nvidia's stock could be in the
00:10:59
next 10 years before I do that if you're
00:11:01
new here please subscribe the channel
00:11:02
and click that Bell for notifications
00:11:04
I'm trying to get this channel to over
00:11:06
50 000 subscribers in 2023 and you can
00:11:09
help me out by subscribing today and if
00:11:12
this video is useful drop me a like and
00:11:14
drop me a comment below and I do need to
00:11:16
announce that this video is sponsored by
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The Motley Fool If you'd like to see the
00:11:19
10 best stocks to buy now visit fool.com
00:11:22
forward slash fired up well you can also
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join our private Community Patron
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Discord by visiting patreon.com forward
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00:11:31
Motley Fool does not tell me what to
00:11:33
create or what to tell you I'm
00:11:35
independent they're a great partner
00:11:36
check those guys out and I would love to
00:11:39
talk with you directly in Discord so
00:11:41
join us today so let's look at the
00:11:43
10-year price and Revenue TTM so the
00:11:46
purple line is the Nvidia stock price
00:11:48
and you can see that's a straight line
00:11:49
up that's basically parabolic that's one
00:11:52
of the most insane moves I've seen on a
00:11:54
stock of this size in a very long time
00:11:56
and the orange line is going to be the
00:11:58
revenue TTM and you can see that has
00:12:00
accelerated along with the share price
00:12:02
these charts help you visualize what's
00:12:04
going on with the stock and why the
00:12:06
stock price has done what it's done and
00:12:08
this is the 10-year market cap it's
00:12:10
going to look very similar to of course
00:12:11
the stock price nvidia's market cap is
00:12:14
now over a trillion dollars this is the
00:12:16
10-year price to sales ratio you can see
00:12:18
it was under 12 closer to 10 and it
00:12:20
ripped all the way up to 40. and here's
00:12:22
the PE Ratio now this is a trailing 12
00:12:24
month PE ratio so keep that in mind
00:12:26
right now it says
00:12:28
219.69 this is a very important slide
00:12:31
right here this is the Ford PE and it's
00:12:33
a 54 which isn't dirt cheap but it's
00:12:36
actually cheaper today than it was over
00:12:37
a year ago you can see May of 2022 so if
00:12:40
you go back to say February March you're
00:12:43
up over 80 close to to 100 p e ratio
00:12:45
going back about 14 months so nvidia's
00:12:48
recent earnings report and that for
00:12:49
guidance is very strong now this is the
00:12:52
p e ratio forward one year and this is
00:12:54
sitting just under a 42. so if we want
00:12:57
to figure out where the stock is going
00:12:58
to be in 10 years we have to try to
00:13:00
predict how much revenue Nvidia will
00:13:02
bring in in 2033 so let's look at the
00:13:05
GPU Market we talked earlier 400 billion
00:13:08
dollars in 10 years and I think that's a
00:13:09
conservative number now the flip side of
00:13:11
that the bear argument is that this is
00:13:13
going to be commoditized and maybe that
00:13:15
market won't be as large but we are
00:13:17
going to use 400 billion dollars because
00:13:18
it is one of the more conservative
00:13:20
numbers I've seen so earlier we said
00:13:22
that Nvidia controls about 90 percent of
00:13:25
the GPU Market let's be conservative
00:13:27
again and assume that Nvidia loses
00:13:29
market share to competition but they
00:13:31
still control 50 percent of that market
00:13:33
share so half of 400 billion which is
00:13:36
200 billion dollars plus we need to add
00:13:38
in that recurring software revenue and
00:13:40
higher margins let's just assume that
00:13:42
Nvidia gains a third of the the AI
00:13:44
software Tam we talked about earlier
00:13:46
that Tam was 300 billion dollars let's
00:13:48
assume they get a hundred billion
00:13:49
dollars in 10 years and then Automotive
00:13:51
we said was the 300 billion dollar Tam
00:13:53
let's also assume they only get one
00:13:55
third of that Tam for 100 billion
00:13:57
dollars in revenue and earlier we said
00:13:58
other segments were about a hundred
00:14:00
billion dollars in Tam let's use 50
00:14:02
billion or half of that so if you add
00:14:04
all those up the total would be 450
00:14:06
billion dollars in Revenue in 10 years
00:14:08
for NVIDIA but let's be conservative
00:14:10
again and let's assume that Nvidia only
00:14:13
gets 350 billion dollars in Revenue
00:14:15
instead of 450 billion so market cap
00:14:17
Nvidia trades at about 17 times sales
00:14:20
that's the five-year average price to
00:14:22
sales ratio so there is a premium
00:14:24
valuation baked in and that could fade
00:14:27
over time but the margins will also
00:14:29
increase so I think it's safe to assume
00:14:32
17 times sales because those two metrics
00:14:34
will balance each other out now before I
00:14:36
go on guys of course this is speculation
00:14:38
nobody has a crystal ball and I I don't
00:14:40
know with 100 certainty where Nvidia
00:14:42
stock is going to be I'm trying to use
00:14:44
data to make an educated hypothesis of
00:14:47
four different scenarios for you okay so
00:14:49
if Nvidia kept that same historic price
00:14:51
of sales ratio that would put Nvidia at
00:14:53
around 5.9 trillion dollar market cap
00:14:57
over 500 percent higher from where it's
00:14:59
trade now again it's about a trillion
00:15:01
dollar market cap and really closer to
00:15:03
600 percent so where will Nvidia stock
00:15:05
be in 10 years here are the four
00:15:07
different scenarios four possibilities
00:15:09
and this is not Financial advice simply
00:15:11
speculation nobody can predict the
00:15:13
future so the extreme bold case is going
00:15:16
to be 10 trillion dollars or 10x so
00:15:18
essentially going from a one trillion
00:15:20
dollar market cap to 10 trillion dollars
00:15:21
because if you remember earlier I was
00:15:23
purposely trying to be conservative so I
00:15:25
think on the extreme bull case 10
00:15:27
trillion dollars I'm not saying it's
00:15:29
going to happen with certainty I'm
00:15:30
saying it's a possibility the bull case
00:15:32
six trillion dollars or 6X from where
00:15:35
it's at now the bear case I think it's
00:15:37
still a three trillion dollar company in
00:15:39
10 years that's 3x higher than today in
00:15:41
the extreme bear case I think two
00:15:43
trillion dollars it's still going to be
00:15:44
double where it's at today two trillion
00:15:46
dollar market cap by 2033. if you're new
00:15:49
here make sure you subscribe to the
00:15:50
channel click that Bell for
00:15:51
notifications drop me a like drop me a
00:15:53
comment I appreciate your time and
00:15:54
attention have a great rest of your day
00:15:56
take care
