Will Nvidia Be the First Stock to Reach $10 Trillion?

While it may take years, it is probable that a company will eventually achieve a $10 trillion market cap.

Nvidia (NVDA) stock is on the rise once again, reaching a new historic high recently. This surge follows strong earnings from their key partner, Taiwan Semiconductor Manufacturing, and excitement surrounding its new Blackwell platform, which is reportedly sold out for the upcoming year.

Nvidia's CEO, Jensen Huang, described the demand for these new chips as "insane," reflecting a robust interest in the company’s offerings.

Thanks to Taiwan Semi's positive comments, fears regarding an AI bubble have lessened. CEO C.C. Wei emphasized that his company collaborates with nearly every AI innovator and states, "The demand is real, and I believe it's just the beginning of this demand." He predicts this trend will persist for many years.

In the ongoing AI competition, Nvidia has captured a considerable market share, with its stock price increasing almost tenfold since the beginning of 2023, shortly after the debut of ChatGPT.

Throughout this period, Nvidia's market capitalization has surged by about $3 trillion, positioning it as the second most valuable company in the world, just behind Apple (AAPL). As of October 18, Nvidia's market cap stood at $3.39 trillion, closely following Apple’s $3.57 trillion market cap, while Microsoft is at $3.11 trillion.

Can Any Company Reach a $10 Trillion Market Cap?

While it may sound ambitious to predict which company will be the first to reach a $10 trillion market cap, it is not entirely out of the realm of possibility. Apple was the first U.S. company to achieve a $1 trillion valuation in August 2018, something that seemed far-fetched at the time. Just five years later, it reached the $3 trillion level.

If Apple could triple its value in just five years, it might not be too difficult for Nvidia or another competitor to accomplish a similar feat, achieving a valuation of $10 trillion within the next five to ten years.

The Contenders for the $10 Trillion Milestone

Apart from the three companies currently valued at $3 trillion, several others exceed $1 trillion. These include Alphabet, Amazon, Meta Platforms, Taiwan Semiconductor, and Berkshire Hathaway.

For any of these companies to hit the much-coveted $10 trillion mark, they will need to demonstrate substantial growth in both revenue and profit, likely requiring an expansion of their service and product markets. However, Berkshire Hathaway, which operates mainly mature businesses, is less likely to reach this target compared to its tech counterparts.

Why Nvidia Holds an Advantage

Among the tech giants like Apple, Microsoft, and Nvidia, the latter is currently growing at the fastest pace. Nvidia has recently reported five consecutive quarters of triple-digit revenue growth. Although this streak might halt in the coming third quarter, analysts still forecast impressive continued growth, predicting an 82% increase in revenue for the third quarter and 43% up to 2025, aiming for $182 billion.

Nvidia's growth trajectory appears to set it apart as it is better positioned to take advantage of upcoming technological advancements, especially in generative AI, autonomous vehicles, and robotics. The company has secured a significant competitive advantage in AI GPUs, which will be crucial for the functionality of these technologies.

It is important for investors to consider that the innovations leading to the first $10 trillion company may not even be apparent at this time.

Currently, the growth prospects for Apple and Microsoft may appear more limited. Apple dominates the consumer electronics market, and while it can encourage consumers to upgrade phones and explore its range of services, the smartphone market has reached maturity. Similarly, Microsoft’s growth is tied to enterprise tech spending, which does not typically see rapid yearly increases.

Is Nvidia on Track to $10 Trillion?

Nvidia’s journey to a $10 trillion valuation will hinge on its capacity to navigate competition, leverage the AI boom, and either maintain or grow its already substantial profit margins.

While this achievement may not be simple, it remains within possibility, particularly over a 5 to 10 year span. Apple's journey from a $1 trillion valuation in 2018 to its current standing of $3.5 trillion suggests that there are no set ceilings to stock market valuations.

Nvidia has already provided substantial returns for its investors, and further growth potential exists. A $4 trillion market cap may be within close reach for Nvidia, and looking further ahead, $10 trillion seems attainable.

Nvidia, marketcap, AI