Prediction: This 1 Catalyst Will Help Nvidia Do Something No Other Company Has Ever Done.
Nvidia has transformed from a gaming chip provider to a leader in AI chips, achieving a 94% revenue increase in a recent quarter. The company aims to reach a trillion-dollar market cap, driven by the launch of its new Blackwell architecture, which has seen high demand. Nvidia's stock has surged 2,600% over five years, and analysts predict continued growth. With a forecasted 70% revenue growth and 35% annual earnings-per-share growth, Nvidia is positioned as a top long-term investment in AI.
In just a few years, Nvidia (NVDA -3.22%) has accomplished a lot. The company went from primarily serving the video-gaming market with its chips and generating less than $5 billion in annual revenue to a position as artificial intelligence (AI) chip leader. This dominance is helping Nvidia bring in more revenue in just one quarter than it used to generate in a whole year. Revenue climbed 94% to a record of more than $35 billion in the recent three-month period.
On top of this, Nvidia has scored other wins, such as entering the Dow Jones Industrial Average this year and soaring past Apple to become the world's most valuable company at more than $3.5 trillion. Now, moving forward, what's next for Nvidia? My prediction is one catalyst will help this AI powerhouse do something that no other company has ever done.
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From video games to artificial intelligence
Before talking about my prediction, though, let's consider Nvidia's path so far. As mentioned, Nvidia used to mainly serve the video-games market with its high-performance graphics processing units (GPUs). But the GPU's ability to process many tasks at once meant it could be very useful elsewhere too; Nvidia's creation of parallel computing platform, CUDA, helped this transition happen.
And as the AI boom picked up, it was clear that Nvidia's GPUs would play a major role in this high-growth industry. Nvidia went all in on AI, not only tailoring its GPUs to the needs of this newish technology but also providing a vast array of related products and services. This helped the company take more than 80% share in the AI chip market and position itself for victory over time.
Today, Nvidia is the "go to" source for any player aiming to develop an AI project. And Nvidia counts the world's biggest technology companies as its major customers -- from Meta Platforms to Microsoft. It's also important to note that Nvidia's products and services are available across all public clouds, making it easy for customers to get in on Nvidia's AI offerings.
All of this has led to triple-digit revenue growth quarter after quarter for the company's data center business and margins surpassing 70%. So not only is Nvidia winning when it comes to revenue growth, it's also winning when it comes to profitability on sales.
Nvidia's stock performance has reflected this success story, with shares soaring 2,600% over the past five years -- and this year, they're heading for nearly a 200% increase.
Nvidia's market value is set to rise
Now, let's consider my prediction. I say that one catalyst right around the corner will help Nvidia do something that no other company has ever done. And that's to make it to a $4 trillion market capitalization.
What's the catalyst? The company's launch of its new Blackwell architecture and best-performing chip ever. Nvidia already has sent out 13,000 Blackwell GPU samples to customers. And Microsoft and Oracle recently posted on social media, showing their new Blackwell-powered racks. Nvidia aims to ramp production in this current quarter and even bring in billions of dollars in revenue from Blackwell during the period.
On top of this, Nvidia has spoken of "insane" demand for Blackwell, with this demand exceeding supply. This should drive growth for the company and please investors, so it could progressively push the stock higher.
To get to a $4 trillion market cap, Nvidia's shares would have to rise about 13% to $165 from the price of about $146 as of the Nov. 21 market close. That's a clear possibility, considering the company's valuation today and growth prospects. Trading at 50 times forward earnings estimates, Nvidia isn't cheap, but it's reasonably priced for a high-growth player, allowing for room to run. Nvidia forecasts fourth-quarter revenue growth of about 70%. And analysts expect annual earnings-per-share growth of 35% over the coming five years.
So, high demand for Blackwell -- a potentially game-changing platform -- along with Nvidia's valuation today make it possible for this company to do something no other company has done: reach $4 trillion in value. And whether this happens right away or at some point down the line, Nvidia, thanks to its leadership, commitment to innovation, and growth prospects, makes a top long-term AI buy.