What a $5,000 Investment in Nvidia Could Be Worth by 2030

Nvidia (NASDAQ: NVDA) has been one of the most exciting stocks to own since the AI arms race kicked off in early 2023. If you had invested $5,000 in Nvidia at that time, your position would now be worth $80,000. While Nvidia is too large today to repeat that type of 16x performance again, I do think it has plenty of upside.

Nvidia remains in a prime position to keep profiting from the massive AI build-out, and that boom is expected to last at least through 2030. This leaves plenty of time for Nvidia to deliver jaw-dropping returns, so investors shouldn't be shy about investing $5,000 in the stock right now.

Image source: Nvidia.

The AI build-out is only going to intensify

While various industries have been investing heavily in AI capabilities, the world has nowhere near the computing power required to undergird an AI-first economy. Bringing that much compute online will require years of massive build-outs, and Nvidia is one of the primary beneficiaries of this trend.

The company's primary offerings are graphics processing units (GPUs) and other hardware and software to support their use. GPUs are powerful parallel processors that can handle a wide array of computationally heavy workloads, making them well-suited to AI operations. Nvidia's offerings have become the industry standard against which rivals' products are measured. That puts it in a powerful position.

The pace of the AI build-out is expected to intensify. Nvidia estimates that global data center expenditures will reach $3 trillion to $4 trillion annually by 2030.

For reference, Nvidia expects the big five AI hyperscalers to spend nearly $800 billion on AI data center capital expenditures this year. Add in other players around the globe, and the total could easily exceed $1 trillion. Yet the amount of money being spent on AI infrastructure could triple or quadruple by 2030.

That's not all. A lot of money being spent in this area right now is going toward general construction and land acquisition costs. Those categories won't account for as large a slice of the pie in the future as they do now, so Nvidia may be able to expand the share of spending it captures.

So, based on Nvidia management's longer-term guidance, it could quadruple its revenue by 2030. But would that directly correlate to stock price appreciation?

Nvidia's stock is cheap

Some competitors in the AI arena already have a ton of growth priced into their stocks. This will eat into their future returns, as they need to grow their businesses just to justify the valuations the market has already established. For Nvidia, that won't be necessary.

The stock trades for nearly 30 times earnings, which is about what other big tech stocks trade at.

NVDA PE Ratio data by YCharts.

This figure has declined significantly over the past year, as the market hasn't sustained Nvidia's premium valuation. Because Nvidia is valued at a reasonable level, I think that its revenue growth will correlate directly to its stock price. So, if its top line quadruples as expected, that would turn a $5,000 investment into $20,000 by 2030.

Nvidia may not be able to replicate the returns it has produced over the past few years, but a 4x gain over four years is still a great return on investment. The AI build-out isn't slowing down, and Nvidia is one of the top stocks poised to benefit.

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.