Nvidia Stock Could Surge by 2028: Here's How Beginners Can Get In Now According to Motley Fool's Price Estimates
I'm LongbridgeAI, I can summarize articles.Motley Fool analysts suggest Nvidia (NVDA) stock could surge by 2028, driven by its central role in the AI boom. Despite a P/E ratio slightly above the S&P 500, forward earnings projections indicate potential growth. The article advises beginners on purchasing methods, including fractional shares via brokers like Robinhood or Charles Schwab, while noting inherent investment risks.
Even if you're a total novice to the stock market, you've probably heard of Nvidia (NVDA +0.66%).
Nvidia is now the most valuable company in the world, worth more than $5 trillion. Its chips have formed the backbone of the AI revolution, and the top AI labs and cloud computing platforms rely on them to make AI applications run.
If you were fortunate enough to buy Nvidia a decade ago and hold it, you would have made a huge return as the stock is up more than 14,000% during that time. That means a $1,000 investment in Nvidia would now be worth more than $14,000.
The stock won't do that again over the next decade, but it still looks poised to soar by 2028. Here's how I see it.
Image source: Getty Images.
Nvidia is still cheap
There's a lot of jargon in investing, but one of the most important concepts that beginning investors can learn is the price-to-earnings ratio, or P/E ratio. This is a company's price per share divided by its earnings per share.
Newbie investors often think that a stock's share price determines whether it is cheap or not. For instance, a $10 stock would be cheap and a $500 stock would be expensive, but the share price alone isn't really meaningful.
Owning a share of a stock is a claim on its earnings, so what really matters is how much earnings you get relative to the price of the stock. That's the P/E ratio. The lower it is, the cheaper the stock.
Nvidia now trades at a P/E of 29, which is slightly higher than the S&P 500's P/E ratio of 25. The S&P 500, an index that holds 500 of the biggest U.S. stocks, is generally seen as the market average. According to the numbers above, Nvidia is a bit more expensive than the S&P 500. However, the P/E ratio is backward-looking, and stocks are priced based on future earnings or cash flows.
Because of its central position in the AI boom, Nvidia is growing much faster than the S&P 500. Wall Street expects the company to grow revenue by 91% this year and 66% next year. For fiscal 2028, which ends in January of that year, Nvidia is expected to have earnings per share of $15.68.
Based on that forecast, the stock trades at 14.6x next year's earnings. or a forward P/E of 14.6. If Nvidia maintains its current P/E ratio and hits that EPS forecast, the stock would double in less than a year and a half.
NASDAQ: NVDA
Key Data Points
How to buy Nvidia stock
If you're new to investing and you want to buy Nvidia stock, you'll first need a brokerage account if you don't already have one. You can open one up with a platform like Robinhood, Interactive Brokers, E*TRADE from Morgan Stanley, or Charles Schwab. There are a lot of options for brokers.
Nvidia is currently trading around $228 a share, so you'll need that much to buy one share. However, many brokerages now offer fractional share purchasing, meaning you can buy a fraction of a share of Nvidia, allowing you to get ownership for less than the price of a share. Once you have an account, you'll need to search for the stock using the ticker, NVDA, and then choose an order type. Using a market order will execute the trade immediately and is the easiest way to buy a heavily traded stock like Nvidia. If you want to set a maximum price you're willing to pay, you can use a limit order.
Keep in mind that while Nvidia's future looks promising and the numbers favor continued gains in the stock, there is always risk in stock investing. There is no guarantee that the stock will go up between now and 2028. With any investment, it's a good idea to keep a long-term view and continue to follow the stock. Don't just buy and forget. If things change, you may want to sell.
Still, I think the odds are in your favor. As long as the AI boom continues over the next two years, Nvidia looks well-positioned to be a winner.