Just when you thought Nvidia (NASDAQ:NVDA) stock couldn’t get any hotter, it got red-hot thanks a huge upgrade from Evercore ISI. On Friday, Sept. 28, analysts from Evercore ISI upped their price target on Nvidia stock to a Street-high $400 on the idea that Nvidia was becoming the “AI standard company.” That price target represents a monstrous 40%-plus upside, so Nvidia stock naturally traded higher on the news.

But, is that really possible? Can Nvidia stock, already up 1,700% over the past five years, rally another 40%-plus to $400?

Absolutely. It may not happen within the next twelve months as Evercore analysts expect, but Nvidia is transforming into the “AI standard company,” a transformation which gives the company a massive addressable market and huge long-term growth drivers. Inevitably, those long-term growth drivers will keep Nvidia stock on a winning path — and eventually drive the stock price to $400.

I don’t see Nvidia stock getting there for another three to four years. But 40%-plus upside in a three- to four-year window is still good enough return to warrant owning Nvidia stock here and now.

Investment takeaway? Stick with Nvidia stock, both in the near and long term.

Consensus Street Estimates Seem Light on Nvidia Stock

Everyone loves to talk about Nvidia as if this company is leading the AI revolution and positioned for huge growth over the next several years, as AI technologies become the global norm.

Yet, despite all that hype, consensus Wall Street estimates for Nvidia aren’t that great. Revenue growth this year is expected to be over 30%; earnings growth is pegged at over 50%. Those huge growth rates seem about right for a company supposedly leading the AI revolution.

But sales next year are expected to rise by just 14%. Earnings are expected to rise less than 10%. Those growth rates seem out of sync with this company’s robust secular growth narrative. Why the disconnect? Because supply ramp in the semiconductor market has analysts worried about margins and revenue growth next year. Consensus estimates reflect those concerns.

But those concerns seem to miss the big picture. The big picture here is that Nvidia is in a class of its own in the semiconductor market, developing and distributing the most complex AI-oriented chips in the world. Demand for these chips isn’t going to slow meaningfully, or at all, anytime soon. Meanwhile, it is tough to see supply ramp weighing all that much, if at all, on revenue growth or margins.

Overall, Street estimates for revenue and earnings next year seem light. Hence, Nvidia stock looks ready to (yet again) outperform next year through a series of beat-and-raise quarters.

What If Estimates Move Higher?

The big question is: if/when estimates move higher, where will Nvidia stock go? This is where $400 starts to look like a reasonable price target.

When looking at Nvidia’s end-markets from data center to gaming to virtualization to automation and autonomous driving, these are all commonly believed to be 20%-plus growth industries over the next five-plus years. The volume of digital data globally is only exploding higher, and hyperscale data center operators are increasingly expanding out data center capacity, while simultaneously improving efficiency through AI-enhanced technologies. Meanwhile, the gaming and virtualization markets are set to boom as AR/VR technology goes mainstream and automation is just scratching the surface of its global potential.

Overall, then, pretty much all of Nvidia’s end-markets have 20%-plus growth potential over the next several years. If Nvidia can maintain leadership position in those markets, this is a company which should be able to grow revenues at a 20%-plus clip over the next several years, too.

Let’s assume 20% growth. That would put fiscal 2023 revenues at over $24 billion, versus under $10 billion in fiscal 2018.

Gross margins should improve slightly during this stretch due to favorable pricing from enhanced chip complexity and burgeoning demand. Meanwhile, the opex rate should fall some due to revenue growth driving expense leverage. Realistically, I think 20% revenue growth and some margin expansion can drive earnings per share to $15 by fiscal 2023.

Nvidia stock normally trades at 27 times forward earnings. A 27 forward multiple on $15 implies a fiscal 2022 end price target of $405.

Thus, I think realistic long-term growth estimates pave a path for Nvidia stock to hit $400. Granted, that won’t happen for a few years. But even if you discount that $405 price target back by 10% per year, you arrive at fiscal 2019 end price target of $305. From today’s $280 levels, that implies another near 10% upside over the next few months.

Bottom Line on NVDA Stock

NVDA stock is a long-term winner. While Evercore’s $400 one-year price target seems aggressive, $400 levels seem achievable within the next several years. Thus, I think you stick with this stock in both the near and long term.

As of this writing, Luke Lango was long NVDA.