The AI Revolution: Nvidia’s Rise to $10 Trillion

There’s a lot of buzz surrounding artificial intelligence (AI), and for good reasons. Since AI gained traction early last year, companies have eagerly embraced this technology, which promises to enhance workflows, generate unique content, and vastly improve productivity. Businesses are investing heavily to harness AI’s potential, and spending is growing rapidly.

Spending by major tech giants—Microsoft, Meta Platforms, Alphabet, and Amazon—is forecasted to nearly reach $250 billion this year in capital expenditures to support AI advancements, with growth momentum showing no signs of slowing.

One clear winner from this surge in investment is Nvidia (NASDAQ: NVDA). As a provider of the graphics processing units (GPUs) that fuel the AI boom, Nvidia is poised to become a key player in what many expect to be a $10 trillion market.

But Nvidia’s strengths extend beyond AI. The company has additional growth drivers that could elevate its stock to new heights.

Image source: Getty Images.

The Roots of Nvidia’s Success

Nvidia started its journey pioneering the GPU in 1999, primarily for creating realistic images in video games. This innovation was driven by parallel processing, allowing numerous calculations to occur simultaneously. By breaking tasks into smaller parts, Nvidia transformed the gaming industry and soon expanded its technology into various fields like data centers, cloud computing, autonomous vehicles, machine learning, and now generative AI.

Growth Figures Reveal Strong Performance

Over the last decade, Nvidia’s revenue has skyrocketed by 2,300%, with net income soaring by 8,460%. Although the stock has experienced volatility, its strong financial results have led to an astonishing 29,050% increase in share price. For its third quarter of fiscal 2025 (ending October 27), Nvidia reported record revenue of $35 billion—up 94% year over year and 17% sequentially—alongside adjusted earnings per share (EPS) of $0.81, up 103%. The data center segment, including AI chips, drove this growth with a 112% revenue jump to $30.8 billion.

Demand appears to be sustained, with analysts at Goldman Sachs estimating that the AI market could exceed $7 trillion by 2030. An improving economy encourages businesses to invest in AI technologies, boding well for Nvidia’s prospects.

Multiple Growth Avenues

Nvidia’s primary opportunity lies in the growing use of AI, but the company has other avenues for success.

Gaming once served as Nvidia’s primary sector of growth, but AI has taken center stage recently. Despite this shift, gaming still contributes 10% of Nvidia’s revenue. As the economy recovers, industry experts anticipate a release of pent-up demand, likely triggering an upgrade cycle in the gaming market particularly as the holiday season approaches.

Nvidia commanded 88% of the discrete desktop GPU market in the second quarter, per Jon Peddie Research. Although third-quarter data is not finalized, Nvidia’s position is expected to remain strong. Furthermore, video game processor demand is projected to balloon from $3.6 billion in 2024 to $15.7 billion by 2029, representing a 34% compound annual growth rate (CAGR), according to Mordor Intelligence. As a leading supplier, Nvidia stands to gain from this growth.

Additionally, the data center market is rapidly expanding due to digital transformation. As cloud computing needs increase, so does the demand for data centers. Nvidia holds a commanding 95% share of the data center GPU market, as reported by CFRA Research analyst Angelo Zino. The market is predicted to rise from $302 billion in 2024 to $622 billion by 2030, with a 10% CAGR, according to Prescient and Strategic Intelligence Market Research.

Nvidia also dominates the growing market for machine learning, capturing an estimated 95% share, according to New Street Research. With such a strong foothold in multiple sectors, Nvidia has numerous avenues for further growth.

Aiming for $10 Trillion

Nvidia currently has a market cap of about $3.58 trillion, indicating a 179% increase in share price is necessary to reach the $10 trillion milestone. Wall Street anticipates revenue of nearly $126 billion in fiscal 2025, resulting in a price-to-sales (P/S) ratio of around 28. To support a $10 trillion valuation, Nvidia would need to boost annual revenue to approximately $352 billion.

Projected revenue growth stands at 47% annually over the next five years. If Nvidia meets this target, reaching a $10 trillion market cap by as soon as 2028 may be possible. This outlook is shared by Beth Kindig, CEO and lead tech analyst for the I/O Fund, who states:

We believe Nvidia will reach a $10 trillion market cap by 2030 or sooner through a rapid product roadmap, its impenetrable moat from the CUDA [Compute Unified Device Architecture] software platform, and due to being an AI systems company that provides components well beyond GPUs, including networking and software platforms.

Considering the many pathways for growth and the swift adoption of AI technology, Kindig’s analysis appears solid.

However, investors should exercise caution. This summer, Nvidia’s stock fell by 27% in just six weeks amid rumors that the launch of its AI-focused Blackwell chips could be postponed. While confidence in the stock has since returned, this experience serves as a reminder of the volatility that can accompany such ambitious growth targets.

Currently, Wall Street forecasts an EPS of $4.20 for Nvidia in fiscal 2026, which begins in late January. That translates to a forward earnings ratio of approximately 33 times, a reasonable price for a company that provides essential processors powering one of the most significant shifts in technology.