Nvidia’s rise has been astronomical, increasing its market cap. From $1.1 trillion to $3.1 trillion Tech investors who predicted success in the past 12 months and early on Amazon and Tesla He said this is just the beginning.
“In the most optimistic scenario, Nvidia’s potential scale is bigger than I’ve ever seen, with a market cap that could reach double-digit trillion dollars,” said James Anderson, a former partner at investment giant Baillie Gifford. Said Financial Times“This is not a prediction, but a possibility if artificial intelligence works for customers and NVIDIA’s lead holds up.”
The chip makers behind OpenAI’s ChatGPT are: AI Boomcast 500,000 new millionaires Companies that have invested in technologies that are beginning to revolutionize the workplace and media consumption. NVIDIA, along with tech giant Amazon, Google, Microsoftand appleis worth $14.5 trillion, About 32% of the S&P 500Anderson calculates that the AI darling’s data-center revenues are up about 60%, and if that trend continues over the next decade, the company’s market capitalization would reach about $49 trillion — more than the combined value of all companies in the S&P 500. This equates to roughly $45.84 trillion.Anderson estimated the probability of this outcome to be between 10% and 15%.
Anderson’s predictions are lofty, but his hunches have proven correct in the past. The spirit of taking on a bold challenge or giving upAnderson was one of Amazon and Tesla’s biggest backers (his investment in the EV giant was second only to CEO Elon Musk’s). From 2005 to 2021, the Scottish Mortgage Investment Trust, managed by Baillie Gifford, returned 2,240%. The firm invested in Nvidia in 2016. Lingot Investment Management, where Anderson is now an investor, is $650 million endowment The largest position is held by Nvidia.
When Anderson first started investing in the company, Nvidia didn’t have a clear path to success, he says. It was too early to tell whether it would be a gaming company, a cryptocurrency company or an AI company. But it had the advantage of early success, unlike Amazon and Tesla, which “didn’t start from a very profitable and dominant position; they had to get there.” In some ways, Anderson still sees Nvidia as an agile company.
“it is, [graphic processing units] “The implications of not just AI, but the use of AI, range from excitement to potential pause to, most importantly for us, transformation of an industry,” Anderson said.
Not so early
Other financial experts don’t share Anderson’s bullish view of Nvidia. Aswath Damodaran, a finance professor at New York University’s Stern School of Business, argues that Nvidia is riding a wave of early AI optimism.
“The momentum is clearly with Nvidia,” Damodaran said. Said CNBC In May. “They can do no wrong. Everything they touch turns to gold.”
Damodaran said Tesla A similar rise in 2020Its market capitalization has soared, reaching $1.2 trillion in 2021, but its stock price has plummeted by about 30% this year alone. Meta and Google have also struggled with increasing competition. I loosened my grip In the technology world, NVIDIA Revenue He argued that expectations for the company’s future may be too high to justify its excessive valuation. Damodaran said the AI chip market alone isn’t worth $1 trillion, and the broader AI market is worth about $2 trillion to $3 trillion, and Nvidia needs to be in multiple big AI markets to maintain and grow its value.
“That’s clearly a possibility,” Damodaran said, “but is it plausible? I don’t think so.”
Doug Clinton, managing partner at Deepwater Asset Management, said it’s too early to tell whether Nvidia has the power to lead big tech companies to the cutting edge of AI in the long term. While Nvidia’s enormous growth may seem intimidating, especially given Demand for AI It is expected to increase.
“Everyone is worried that demand for chips will eventually slow down, but that slowdown hasn’t happened yet,” Clinton said. Said Yahoo Finance The economic slowdown began last month, “and it may take longer than we think.”
Nvidia 80% of the global GPU semiconductor marketClinton said the company is likely to continue to thrive in the near future.
“Can Nvidia maintain its dominance in providing the brains for these artificial intelligence models?” he said. “I think it can maintain that position for the next three to five years.”
