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Could NVIDIA Reach A $50 Trillion Market Cap?

AInvestMonday, Jul 15, 2024 1:58 am ET
1min read

Against the backdrop of the rapid development of artificial intelligence, after an epic surge, the upward trend of NVIDIA may still be in its infancy.

James Anderson, a top global tech investor, recently estimated in an interview that Nvidia's market value could approach $50 trillion in the next decade, surpassing the total market value of all current S&P 500 companies.

Anderson believes that the demand for AI chips is growing at an annual rate of about 60%. Over 10 years, this growth could translate into earnings per share of $1350 for Nvidia and a market value of $49 trillion. He believes there is a 10-15% chance of this scenario occurring.

The total market value of all companies in the S&P 500 index is currently around $47 trillion.

Anderson believes that Nvidia's growth potential far exceeds that of any company he has seen before.

He pointed out, The potential scale of Nvidia in the most optimistic outcome is both way higher than I've ever seen before and could lead to a market cap of double-digit trillions. This isn't a prediction but a possibility if artificial intelligence works for customers and Nvidia's lead is intact.

Anderson is most famous for his nearly 40-year career at the well-known Scottish investment management firm Baillie Gifford. There, he managed the firm's flagship Scottish Mortgage Investment Trust, which first bought Nvidia in 2016 and helped the investment firm become an unexpected star in the field of tech investment.

Last year, Anderson partnered with the Italian billionaire Agnelli family to establish the investment management company Lingotto Investment Management, and manages a $650 billion fund. The largest investment of this fund is also Nvidia.

Nvidia has been the biggest winner of the AI boom, as it is almost in a monopolistic position in manufacturing chips used for training and running powerful generative AI models, such as OpenAI's ChatGPT. Nvidia CEO Jensen Huang claims the company is at the center of a new industrial revolution.

Nvidia's stock price has soared by nearly 170% this year, with a market value of over $3 trillion, 20 times its market value of $1.5 billion in 2018. In June of this year, Nvidia even surpassed Microsoft and Apple to become the most valuable company in the world.

Anderson added that Nvidia's stock price may fluctuate greatly, and he would not be surprised if Nvidia experienced one or more drops of 35-40%. that's what happens and I hope we'd buy more in that event, he said.


$NVDA(NVDA)

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