Nvidia’s AI accelerator chips have been a game-changer for the company and its investors. Since early 2023, the stock has soared over 800%, making it a highly sought-after investment. But can this growth momentum continue? To answer this question, we need to look at Nvidia’s leadership in AI chips and its future growth prospects.
Nvidia owns between 70% and 95% of the market for AI chips, which means its future growth depends on expanding the market. However, with the global AI chip industry estimated to grow from $123 billion to $311 billion by 2029, Nvidia has a significant opportunity to double its revenue over the next five years.
The company’s new architecture, Blackwell, is expected to deliver significant breakthroughs in performance and efficiency. With up to 20 petaflops of computing power, it can train and operate more intelligent models, and increased demand for AI services will require additional computing resources.
Blackwell has already shown signs of rampant demand, with Nvidia announcing it had sold out its entire capacity for 2025. This lack of supply should also impact ongoing Hopper sales, as some companies may opt to wait for the new chips.
Analysts estimate Nvidia’s earnings will grow by an average of 38% annually over the next three to five years, making its growth prospects look fantastic. The company’s PEG ratio falls comfortably below 2.0 to 2.5, indicating it is undervalued compared to its peers.
In conclusion, with Blackwell showing promising signs and the global AI chip market expected to grow significantly, Nvidia is a buy in my book. Its strong growth prospects and efficient architecture make it an attractive investment opportunity.
Source: https://www.fool.com/investing/2025/01/21/is-nvidia-a-buy