Nvidia's True Growth Potential: The Numbers That Shall Not Be Named (On Wall Street)😉

This is part 3 of the “How Big Could AI Get” series, where we take a Tom Lee (of Fundstrat) approach to bottom-up, first-principles investment research and then present the math-based results, even if the numbers seem insane 😂. Part 1: The $5 Trillion AI Revenue Gold Rush: Why The Bubble Bears May Be Missing The Math Part 2: The $4 Trillion AI Infrastructure Potential No One Is Talking About: Why Hyperscaler Capex Could 5.5X By 2030 We are planning a YouTube channel like “The Compound” where analysts (and teams of analysts) give their takes on investment and economic and member questions. My favorite show is called “Hot Take With Adam & BARP.” I would walk viewers through a “hot take” that seems crazy…but is 100% backed up by the math and then have my BARPiverse fact-checkers act as the straight man to my “wild-eyed Danny Ives style enthusiasm”🤣 Let me give you an example of a “hot take” that sounds crazy…until you check the math😉 Bottom Line Up Front: Nvidia has 122% to 185% Upside Potential Over The Next 1 to 2 Years (57% to 69% CAGR), and 5 Year Return Potential Is A Tad Bigger😉🥳🤑🤯 Let Me Walk You Through Baird’s $500 Price Target And Why It’s 100% Fundamentally Justified If you take a look at the consensus estimates from 2027 and 2028, you can estimate the 12-month forward EPS, meaning the 12-month forward earnings for NVDA…but a year from now. Source: Pacer Funds 66% of fund managers (controlling 80% of fund flows) look at forward PE…so that’s why when asking “what valuation metric is Wall Street most likely looking at,” it’s usually forward PE. Anthropic has tracked 20X sales. Amazon 22X to 24X operating cash flow REITs track FFO. Currently, the forward EPS on NVDA is $10.23 and rising by the week (literally because 2027 becomes more important vs 2026 with every passing week), and 12 months from now, that is $13.22, and 24 months from now, it’s $14.61. This is for you Tommie deWitt😉 OK, so 12 months from now, when Baird is saying “$500 high conviction,” that means 37.8X forward PE in 12 months vs a 35.6X to 41.2X 5-10 year average forward PE. Is that reasonable? Yes. Do I think it will happen? That’s not how I think. On Wall Street, smart investors make their own luck, so I always calculate the fundamentally justified upside potential and base my recommendations and investment thesis updates on it. Applying the best available data X the market’s historical multiple during periods of similar conditions (growth adjusted) is the least speculative way to estimate returns. “Nvidia’s new fair value is a PE of X or Y” that is speculative storytelling…the ZEUS portfolio operates on facts…and stories that explain the facts…not stories that attempt to front-run the facts. OK. So now that I have shocked you with some really cool (yet 100% fact-based) return potential math…let me answer the question that I’ve been working on for almost a week. What is the maximum revenue potential of AI by 2030…and what does that mean for Hyperscaler Capex (50% of which goes to Nvidia)?… And so what does that mean for Nvidia’s potential share price and total return in 2030? The Shocking Investment Return Potential Of Nvidia By 2030: AKA Fun With Infographics!😉 Source: GNG Research AI OK, so let’s start with this really important chart. It shows Goldman’s base case for hyperscaler capex spending through 2031. And then we apply the $3 to $4 trillion chart from Nvidia (that 4 other analyst firms now agree with). Note that the 2026 estimates are lower for the Nvidia forecast BECAUSE the estimates for 2026 and 2027 are rising so quickly. Here is The Consensus For Hypercalers 2 weeks after Earnings Day (April 29th) $863 billion in growth capex for next year…and within 2 weeks of that estimate, Moody’s, Goldman & Morgan Stanley all said $1 to $1.1 trillion. Thus, the reason it’s valuable to calculate the maximum potential the numbers might rise to.