It’s generally a good idea for investors to be a bit skeptical of the valuation of a stock that is up nearly 1,000 percent in only three years. However, when it comes to Nvidia Corporation (Nasdaq: NVDA), Loup Ventures analyst Gene Munster says the company’s unique positioning may provide even more upside for investors in the years ahead.
As time goes on, Munster says Nvidia will be less dependent on gaming revenue and will transition its business to other high-growth markets. Today, gaming accounts for 57 percent of Nvidia’s revenue, but Munster estimates that percentage will shrink to only 41 percent by 2023.
At the same time, Loup expects Nvidia’s impressive overall revenue growth to continue. Nvidia has reported revenue growth of between 32 and 56 percent in each of the last five quarters, and Munster says Nvidia will continue to grow its revenue by a compound annual rate of 23 percent over the next five years.
Growth investors typically seek companies that are on the cutting edge of markets with long-term potential. Munster says he sees four of these markets that will serve as long-term catalysts for Nvidia.
First, he anticipates Nvidia will continue to play a large role in the next generation of gaming growth, which will include a shift to online gaming, a rise in the popularity of esports and an increase in social gaming interactions.
Second, Munster says Nvidia’s data center business will be in high demand as companies increase their reliance on AI and deep learning.
Third, Munster says…
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