1 trillion reasons why Nvidia stock is a screaming buy now

Jensen Huang just gave an astonishing outlook into how he projects spending on AI computing.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) has been one of the most dominant stocks in the market in 2023 and 2024. However, 2025 hasn't been so kind to the computing giant, as its stock is down over 18% from its January highs.

There are fears that the massive AI spending wave could be affected by an uncertain economic outlook or that Nvidia's largest clients may look elsewhere to fulfill their computing power demands. Yet none of those fears have surfaced yet, and Nvidia's CEO and founder Jensen Huang just gave an astonishing outlook into how he projects spending on AI computing.

Nvidia's growth trajectory lines up with Huang's bold prediction

During Nvidia's GTC conference (its annual conference about its products), Huang stated that Nvidia's data center infrastructure revenue will hit $1 trillion by 2028. No company on earth has revenue that large, with Walmart currently holding the top spot at $673.8 billion in annual revenue. Furthermore, that's only data center revenue; it doesn't include any of Nvidia's other segments. However, if Nvidia's data center revenue reaches $1 trillion by 2028, that will dwarf any other segment's revenue total.

That's a huge number, but it realistic?

Over the past four quarters, Nvidia generated data center revenue of $115.3 billion. However, this segment is seeing remarkable growth, as Q4 data center revenue was up 93% from a year ago. So, if Nvidia continues at this 93% pace and keeps it up over the next four years (through 2028), will that be enough to hit $1 trillion?

The answer? Yes.

Should Nvidia continue at its 93% growth rate, it would actually produce $1.6 trillion in data center revenue by 2028. That's a complete overshoot of Huang's projections. Nvidia would only need to grow its revenue at a compound annual growth rate (CAGR) of 72% through 2028 to make the $1 trillion projection happen.

So, to see how realistic this guidance is, investors need to monitor Nvidia's data center revenue growth during each quarterly earnings report. It needs to stay elevated above that threshold during the first few years for Nvidia to stay on target. If it doesn't, then it won't be surprising if Nvidia misses its $1 trillion goal.

While a 72% CAGR seems incredibly optimistic, what can investors expect if Huang is right?

Nvidia would be an incredible performer if it reached $1 trillion in revenue

If Nvidia were to reach $1 trillion in revenue and maintain its 56% profit margin, it would produce $560 billion in profits. That's a mind-boggling figure that no company is even close to right now, and it would provide jaw-dropping returns.

Even if Nvidia traded at the market average price-to-earnings (P/E) ratio of 22.3 (that's what the S&P 500 trades at right now), that would give Nvidia a market cap of $12.5 trillion. Considering that Nvidia's market cap is currently at $2.9 trillion, that would indicate Nvidia's stock would rise roughly 330% over the next four years. Any investor would be happy with returns like that over a four-year period, which makes Nvidia an intriguing stock to buy now.

But what if he's wrong and Nvidia falls short of expectations? Nvidia still looks like a good buy now.

NVDA PE Ratio Chart

NVDA PE Ratio data by YCharts

Nvidia's stock no longer trades at a huge premium. It's now priced at 26 times forward earnings, which is cheaper than many of its big tech peers. So, even if Nvidia still grows but falls short of its $1 trillion in revenue goal, then it should still be a successful investment, as it's not starting off with an unrealistic valuation.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Keithen Drury has positions in Nvidia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and Walmart. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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