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