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Calling for a stock to double in under a year is a bold proclamation. Calling for the world's largest company to double in less than a year seems downright unrealistic. But that's exactly what I'm predicting Nvidia (NVDA +0.84%) will do, and I've got the math to back it up.
The reality is that Nvidia's stock is trading at a very low price. I think investors should pounce on it, as the market isn't ready to value Nvidia for what it's truly worth, and it will easily cross $10 trillion in market cap. Nvidia is the undisputed leader in GPU computing units, which have become the unit of choice for many artificial intelligence (AI) firms.
While some are actively pursuing custom AI computing units, those won't be able to replace Nvidia GPUs on a large scale because the custom AI chips are designed for one workload. At the same time, Nvidia GPUs can handle nearly anything. The market has mispriced Nvidia's stock.
Nvidia has access to information that the average investor doesn't because many of its clients are placing orders for chips far in advance. This gives credence to bold long-term projections such as Nvidia's projection that the capital expenditures of the top five AI hyperscalers will reach nearly $800 billion in 2026 and rise to $1.3 trillion in 2027. For the next fiscal year (FY 2028, ending January 2028), Nvidia expects to grow its revenue by 70%.
Wall Street analysts expect $411 billion in revenue for FY 2027. If Nvidia exceeds this, with a 70% growth in the first half of 2027, its trailing-12-month revenue could reach $555 billion. Nvidia's profit margins have been rising, with a 64% margin over the past 12 months.
If maintained, this would generate $355 billion in profits by the end of 2027. Nvidia's valuation multiple is currently 27.5 times earnings, which is considered far too cheap compared to peers like Apple trading at 37 times earnings. Using a higher multiple of 30, Nvidia's market cap would be projected at $10.65 trillion, easily exceeding its current $5.25 trillion market cap.
This analysis suggests Nvidia is a must-buy stock now, as it could double in value within a year if it meets its projections and trades at a reasonable price.
Source: The Motley Fool
