Prediction: 2 Stocks That Will Be Worth More Than Nvidia 5 Years From Now

Globe and Mail

3 days ago

Key Points
Tesla's robotaxi could change the face of the company.
Meta Platforms' AI advantage and low valuation could lead to a massive surge in the stock price.
Admittedly, trying to ponder stocks that might become worth more than Nvidia may seem unimaginable. When demand for AI accelerators surged out of nowhere, so did Nvidia stock, and it is now a stock with a $3.85 trillion market cap, the world's largest.
However, looking to the future, investors may begin to consider which stocks might outpace Nvidia over the next five years. While a lot could happen over that period, these are likely the stocks with the best chance of surpassing Nvidia.
Tesla
Admittedly, Tesla 's (NASDAQ: TSLA) current business does not look like a record breaker. Automobile sales have fallen recently, and its P/E ratio of 176 is pricey, especially considering its forward P/E ratio of 172 may imply little additional near-term upside.
Still, investors should examine why Tesla trades at a 172 forward multiple, and the answer is likely autonomous driving. Tesla has invested heavily in AI and robotics to develop its platform. It has also begun to roll out robotaxis on the road in Austin, Texas. To that end, Tesla just demonstrated a fully autonomous delivery of a Model Y to a customer 30 minutes away from its Gigafactory in that city.
Cathie Wood's team at Ark Invest saw that breakthrough coming. Amid that research, Ark Invest forecast a $2,900 per share price target for the company by 2029. That would amount to a market cap of $9.3 trillion, far above Nvidia's current market cap.
Why so high? Ark Invest believes that by 2029, its self-driving platform revenue will surpass the revenue earned from automobile sales and predicts the robotaxi will make up 63% of the company's revenue by that year.
Indeed, the robotaxi trials still need to succeed, and Tesla faces competition from Uber, Alphabet 's Waymo, and platforms like the ones being developed by Nvidia and Qualcomm.
Still, its combined development of cars and the platforms that drive them may give Tesla a leg up on its way to surpassing the AI chip giant. That success should also dramatically reduce its P/E ratio, likely serving as a catalyst for a much higher stock price.
Meta Platforms
Meta Platforms (NASDAQ: META) has built its company on dominating social media. Its social media platforms now draw over 3.4 billion people daily to at least one of its platforms. With that popularity, the digital advertising business built around those users has given it a market cap of almost $1.86 trillion, approximately half of Nvidia's size.
Unfortunately for the Facebook parent, its user base now makes up over 40% of the world's population, which will probably mean slower growth for its digital ad business moving forward.
However, its aforementioned user base has given the company a treasure trove of user data that is likely unmatched by any other company. Since the data is likely to be of a more personal nature than data compiled by Google or Apple, Meta likely holds a competitive advantage. With that, it plans to apply that data to build its strength in the AI realm.
To achieve this, it is on track to spend between $64 billion and $72 billion this year alone to invest in this business. Much of that will fund a data center building binge, including a $10 billion, four million square foot facility in Louisiana.
Additionally, Meta is in a strong position from a valuation standpoint. Its P/E ratio of 29 closely approximates the S&P 500 average and is far below Nvidia's 51 earnings multiple. The price-to-sales (P/S) ratio confirms this discount, as Meta's sales multiple of 11 is far below Nvidia's P/S ratio of 26.
Indeed, Meta will have to prove itself. For now, its 16% revenue growth in the first quarter of 2025 is far below Nvidia's 69% increase in the first quarter of fiscal 2026 (ended April 27). Nonetheless, if Meta's AI strategy succeeds, its relatively low valuation and value in the AI market could make it a much larger company over the next five years.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Will Healy has positions in Qualcomm and Uber Technologies. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Nvidia, Qualcomm, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.