The AI Revolution: How Nvidia Could Reach Unprecedented Heights
Legendary investor James Anderson has made a bold prediction: if artificial intelligence (AI) continues to grow at its current pace, Nvidia’s value could skyrocket to a staggering $50 trillion in just 10 years. While this may seem like a far-fetched claim, Anderson’s track record of spotting early winners in the tech sector, including Tesla and Nvidia, makes his words worth considering.
Nvidia’s Rise to Dominance
In the past year, Nvidia’s market cap has soared from $1.2 trillion to $3.2 trillion, driven by the company’s powerful graphics processing units (GPUs) becoming the gold standard for AI processing. The company’s results have been phenomenal, with five consecutive quarters of triple-digit percentage growth and a 94% year-over-year revenue increase in its fiscal 2025 third quarter.
The AI Market: A $15.7 Trillion Opportunity
According to analysts at PwC, the AI market could be worth $15.7 trillion by 2030. If Nvidia can capture just a small slice of this addressable market, its sales and profits could continue to soar. Anderson suggests that demand for AI chips used in data centers is currently increasing by about 60% annually, which could drive Nvidia’s EPS to $1,350 by 2034, translating to a market cap of roughly $49 trillion.
Nvidia’s Dominant Position
Nvidia’s dominance in the gaming chips market and data center space is undeniable. The company boasts a 90% market share in desktop GPUs and a 98% market share in data center GPUs. While competition is expected to increase in the AI chip segment, Nvidia is still expected to be the undisputed market leader.
Anderson’s Bullish Case
Anderson is bullish on Nvidia due to its “persistent exponential progress, competitive advantages in hardware and software, and culture and leadership.” He notes that the company’s market dominance, combined with its ability to maintain profit margins, could drive its value to unprecedented heights.
The Path to $50 Trillion
To reach a value of $50 trillion, Nvidia would need to grow its revenue to roughly $2 trillion annually, assuming a constant forward price-to-sales ratio. While this is a high bar, it’s certainly possible. Wall Street expects Nvidia to generate revenue of roughly $129 billion in its fiscal 2025, and the company would need to grow its revenue by 35% annually until 2034 to reach its target.
Potential Roadblocks
There are many potential issues that could derail Nvidia on its path to $50 trillion, including widespread AI adoption failing to materialize, significant competition emerging, and innovation stumbles. Anderson notes that the probability of the company reaching this lofty height is a fairly slim 10% to 15%.
A Complicated Valuation
Nvidia’s valuation is complicated, with the stock currently trading for 51 times earnings. However, trailing valuations rarely keep up with high-growth stocks, and Nvidia’s average P/E multiple over the past decade is 59. Furthermore, the stock is trading at roughly 29 times next year’s expected earnings, which is an attractive price relative to the opportunity.
Investing in a Leader
Rather than asking whether Nvidia could hit $50 trillion, investors should be asking themselves whether they should invest in an industry leader with a long track record of innovation, driven by once-in-a-generation secular tailwinds, especially if they can buy the stock at a reasonable price. Based on these criteria, Nvidia is definitely a buy.
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