Nvidia (NASDAQ: NVDA) stock has had an unbelievable run. Over the last year, its share price has jumped from $45 (after a recent 10-for-1 stock split) to $126.
The tech stock may just be getting started though. That’s the view of a well-known British technology investor.
The potential for huge gains
The investor I’m talking about is James Anderson. He was previously the portfolio manager of the growth-focused Scottish Mortgage Investment Trust.
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In a recent interview, Anderson said that Nvidia could potentially grow to have a $49trn market capitalisation over the next decade. Given that the company’s market-cap today is only $3.1trn today, that would represent a gain of around 1,480%.
If his forecast is accurate, a $5k investment today (approx £3.85k) could be worth nearly $80k in 10 years’ time.
The potential scale of Nvidia in the most optimistic outcome is both way higher than I’ve ever seen before and could lead to a market cap of double-digit trillions.
Fund manager James Anderson
Expect share price volatility
It’s worth pointing out that Anderson’s forecast assumes that data centre AI chip demand will remain very high at around 60% a year. He believes the probability of this is only around 10-15%.
It’s also worth noting that, looking ahead, he expects the tech stock to be volatile. He mentioned that the stock could experience a 35%-40% share price pullback in the future.
I’m a Nvidia bull
As a long-term Nvidia investor (I’ve owned the stock for about three years now and done very well from it), I find this Anderson forecast very interesting.
For a start, Anderson – who nows runs a $650m fund at Lingotto Investment Management – has a brilliant track record when it comes to profiting from tech stocks. When he was managing Scottish Mortgage Investment Trust, he made a ton of money for his investors with stocks like Amazon and Tesla. So his take on Nvidia is noteworthy.
Second, his view on the stock is quite similar to my own. I’ve said before that if I could only own one stock for the next decade it would be Nvidia. I believe that it has the potential to be a huge winner from the artificial intelligence (AI) revolution, given its dominance in the industry and its visionary CEO Jensen Huang.
I also believe it could benefit from the growth of a number of other industries including self-driving cars, the metaverse, and video gaming.
However, I don’t expect the share price to rise in a straight line. This has always been a volatile stock and there will be 30%+ pullbacks along the way. In the near term, we could see a pullback if chip demand temporarily slows or a competitor releases a powerful new AI chip.
I’m comfortable with short-term volatility here as I plan to hold on to this gem of a stock for a long time. In the long run, I believe Nvidia shares have the potential to make me a lot of money.
