Nvidia’s Ambitious Journey to $20 Trillion: Can It Be Done?

Artificial intelligence (AI) has been evolving for over fifty years, but generative AI made a significant impact early last year. These advanced self-learning algorithms can automate tedious tasks, potentially revolutionizing productivity and sparking the “fourth industrial revolution,” according to experts.

Among the big winners in this space is Nvidia (NASDAQ: NVDA). The company initially developed graphics processing units (GPUs) that brought video game graphics to life, offering the computational power for these demanding tasks. Remarkably, Nvidia’s stock has surged over 800% since last year, leaving many investors contemplating whether it is still a good time to invest.

Encouragingly, one Wall Street analyst claims Nvidia could become the world’s first $20 trillion company, suggesting a near 500% upside from its current market position. But is this feasible?

In this article, we’ll explore Nvidia’s path to potentially achieving this groundbreaking valuation.

Image source: Getty Images.

The Origins of Nvidia’s Success

Nvidia revolutionized computing when it introduced the GPU in 1999, thanks to its method of parallel processing. This approach allows many mathematical calculations to occur simultaneously, greatly speeding up complex tasks. The company soon adapted this innovative processing technology to enhance AI developments.

However, Nvidia’s achievements extend beyond just hardware. The company created the Compute Unified Device Architecture (CUDA), a programming platform that allows developers to enhance their applications by accessing the GPU’s capabilities. This software has become the industry norm, with over 400 libraries available for developers to create and optimize applications across various platforms.

Today, Nvidia’s chips are recognized as the standard in fields such as gaming, cloud computing, machine learning (a precursor to AI), and data centers. Their established position in the industry creates a significant competitive advantage.

The Road to $20 Trillion

Nvidia currently boasts a market capitalization of approximately $3.63 trillion. To reach a valuation of $20 trillion, the stock would need to increase by 495%. Wall Street forecasts that Nvidia will achieve revenues of nearly $129 billion in fiscal 2025, resulting in a forward price-to-sales (P/S) ratio of about 26. If the P/S ratio holds, Nvidia would need to generate annual revenue of around $768 billion to justify a $20 trillion market valuation.

Analysts predict Nvidia can sustain a remarkable 50% revenue growth annually over the next five years. If successful, Nvidia could indeed reach a $20 trillion market cap by 2030. While this may sound optimistic, the accelerated adoption of AI technology in recent years demonstrates the potential for surprise growth. Nonetheless, achieving and maintaining such high growth will undoubtedly present challenges.

A Promising Outlook

One confident analyst, Phil Panaro—founder and former CEO of Boston Consulting Group Platinion—predicts that Nvidia will reach $800 per share by 2030. This projection translates to a market cap of about $19.59 trillion, pushing it close to the $20 trillion mark.

Panaro points to three main factors that could propel Nvidia toward this immense valuation:

• AI penetration currently sits at “less than 1%.” A slight increase in industry adoption could significantly elevate Nvidia’s value.
• The anticipated transition to Web 3, with an estimated cost of $10 trillion by 2030, offers Nvidia a significant opportunity. With less than $1 trillion invested so far, this area relies on GPU technology, which can greatly benefit Nvidia.
• The proposed Department of Government Efficiency aims to address waste in government operations. Initiatives like creating “digital twins” for infrastructure rely on GPU power, presenting additional growth avenues for Nvidia.

These prospects combined create a formidable opportunity that may help Nvidia maintain the 50% annual revenue growth required for a $20 trillion market cap.

Challenges Ahead

While the analyst’s case is compelling, it overlooks some harsh realities. I have been a long-time Nvidia investor, with the stock representing 11% of my portfolio, and I remain hopeful about its future. However, investors must prepare for potential turbulence.

Recall last summer when Nvidia shares plummeted by 27% within a few weeks due to concerns over a delay in the Blackwell chip release. What seemed ominous ultimately led to a recovery, but it’s a reminder that volatility can be a hallmark of technology stocks. Nvidia has faced a 66% decline during a more significant economic downturn, which tested the resolve of many investors. Thus, patience and endurance are essential for any Nvidia shareholder.

Nvidia’s current trading price is about 31 times earnings for fiscal 2026, which begins in January. Although this is slightly elevated, it can still be viewed as attractive for a company with such growth prospects.

As a result, I recommend Nvidia as a buy.

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Danny Vena holds positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the authors’ opinions and do not necessarily reflect those of Nasdaq, Inc.