NVIDIA’s Resurgence: Aiming for a $5 Trillion Market Cap

I have supported one stock for years before most on Wall Street recognized its potential.

While others were preoccupied with fleeting market trends, I identified the significant role this company plays in fueling the AI Boom. In 2023, it emerged as the top performer in the S&P 500 and continues to excel this year.

I am referencing NVIDIA Corporation (NVDA).

Back in June, I forecasted that NVIDIA could become a $5 trillion company. This prediction followed its market cap reaching $3.35 trillion, surpassing Microsoft Corporation (MSFT) at $3.317 trillion and briefly making NVIDIA the largest publicly traded company in the world.

The stock faced a dip in May after its quarterly earnings report, despite impressive second-quarter revenue growth of 122% year-over-year and earnings soaring by 152% year-over-year, exceeding analysts’ expectations. These strong results should have driven the stock higher; however, investor expectations were even greater, leading to a sell-off.

Following that earnings report, NVDA struggled to regain momentum until last week.

Last Tuesday, the stock closed just shy of its all-time high of $135.58 set in June. It consolidated these gains on Wednesday before climbing again on Thursday, achieving a new record. Below, you can see the chart that illustrates NVDA’s performance.

With a market cap of $3.36 trillion, NVIDIA ranks as the second most valuable company globally, following Apple Inc. (AAPL) at $3.53 trillion. In today’s Market 360, I will explain the key factors behind NVDA’s recent upswing and why my $5 trillion market cap forecast might come to fruition quicker than anticipated. Additionally, I will highlight potential future stocks to watch that could replicate NVIDIA’s success and how investors can benefit from them.

The Catalyst Behind NVIDIA’s Recent Growth

The recent surge in NVIDIA’s stock can largely be traced to optimistic statements made by founder and CEO Jensen Huang during an appearance on CNBC’s “Closing Bell Overtime” earlier this month. He noted:

Blackwell is in full production, Blackwell is as planned, and the demand for Blackwell is insane. Everyone wants the most, and everyone wants to be first. The thing that we have done with Blackwell, and what we have announced, is this new AI infrastructure generation every single year. And so we are going to update our platform every single year and the reason for that is, if we can increase the performance… by 2 to 3 times each year, we are effectively increasing the revenue, or throughput, for our customers on these infrastructures by 2 to 3 times each year.

Huang’s remarks alleviated any worries concerning delays in the rollout of the Blackwell chips, as well as fears about potential decreases in AI infrastructure investment from major tech companies.

This indicates that the Blackwell chips are in high demand, serving clients from companies such as Microsoft, Meta Platforms, Inc. (META), and OpenAI. Some analysts at Morgan Stanley suggest that NVIDIA’s Blackwell is already sold out for the next year.

We can expect some of this strong demand for Blackwell chips to reflect in NVIDIA’s third-quarter results, anticipated on Tuesday, November 19. The company projects third-quarter sales will hit $32.5 billion, a rise from $18.12 billion a year earlier. Analysts predict earnings will double year-over-year to $0.74 per share, with estimates having been revised upward in recent months.

However, the impact of the Blackwell chips is expected to be even more substantial in the fourth quarter. KeyBanc recently estimated that revenue from NVIDIA’s Blackwell chips could reach $7.0 billion in that period, alongside robust demand for other GPUs.

Since October 1, NVDA has increased by about 13% and is nearly 36% up from its September low of $100.95. Thus, it needs to rise around 50% to hit a $5 trillion market cap. Given the company’s trajectory and the upcoming quarterly earnings reports, this target seems very achievable.

The bottom line: Despite NVDA’s impressive 172% gain, it clearly has room for further growth.

Discovering the Next NVIDIA

I first recommended NVIDIA back in May 2019 when AI was just starting to gain traction. Since then, the stock has surged nearly 3,168%! These are gains that investors typically only dream of securing once in their lifetime.