Nvidia forecasts $1 trillion capex growth by 2028

Nvidia's optimistic outlook predicts $1 trillion in data center capex by 2028. Market reaction may be cautious now, but if estimates hold, Nvidia could see significant stock price growth.

Date: 22-03-2025

AI Rating: 7

Nvidia's Projections Impress Investors

Nvidia has provided a robust forecast stating that data center capital expenditures could reach $1 trillion or more by 2028. The company’s chief executive, Jensen Huang, indicated that if these projections are realized, Nvidia’s stock may see significant upside as it continues to dominate in the AI and data center space.

Nvidia reported a total revenue of $130.5 billion for its previous fiscal year, with $115.2 billion coming from the data center segment. This means that Nvidia already has a foothold in this space, currently capturing approximately 25% to 30% of the total data center spending expected for 2024, which is projected to be around $455 billion. Maintaining its current market share could yield data center infrastructure revenue between $250 billion to $300 billion in 2028, underscoring the potential growth from its existing operations.

Innovation and Market Expansion

The company is investing in further innovation, introducing powerful hardware such as the new Blackwell Ultra GPU and developing a new chip architecture that combines GPU and CPU advancements. These developments aim to enhance Nvidia’s operating capabilities and maintain their leadership in the AI infrastructure realm. Additionally, the introduction of Nvidia Dynamo software is poised to optimize costs and efficiency across AI systems.

Nvidia is not limited to the AI infrastructure market; it is expanding its horizons into robotics and autonomous driving sectors. Collaborations with General Motors and Toyota to integrate advanced AI features into their vehicles reflect Nvidia's strategy to diversify its market reach, which could influence its stock positively in the long term.

The company holds a favorable valuation, with a forward P/E ratio of under 26 times this year's analyst estimates, and a PEG ratio below 0.5, suggesting Nvidia is undervalued based on typical thresholds.

Stocks: NASDAQ:NVDA NYSE:GM NYSE:TM