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Top tech investor: Nvidia's market cap could hit $5 trillion in a decade

AInvestSunday, Jul 14, 2024 9:40 pm ET
1min read

Notable investor James Anderson expects Nvidia's market value to reach $4.9 trillion in the next decade if the annual growth rate of data center AI chip demand remains around 60%, with a probability of 10-15% for this outcome.

Earlier this week, notable investor James Anderson said the global market value of Nvidia could reach $5 trillion in the next decade, which is more than the combined market value of all the companies in the S&P 500 index.

Anderson pointed out that this possibility is based on the successful application of AI technology and Nvidia's continued leadership in the market.

As demand for generative AI models (such as OpenAI's ChatGPT) surges, Nvidia's stock price has soared 162% year-on-year, with a market value of $3 trillion, up 20 times from about $150 billion in August 2018. In June, Nvidia briefly surpassed Microsoft and Apple to become the world's most valuable public company. Nvidia CEO Jensen Huang said the company is at the center of a new "industrial revolution".

Anderson said Nvidia's competitive advantage in both hardware and software, as well as its unique culture and leadership, are key factors in its important position in the industry.

He noted that when he first bought Nvidia shares in 2016, "I wasn't sure what its main driver was", but after years of observation and investment, he found that "Nvidia was a high-margin, dominant company from the start, unlike other successful investments." He expects Nvidia's market value to reach $4.9 trillion in the next decade if the annual growth rate of data center AI chip demand remains around 60%. The probability of this outcome is 10-15%.

Although Anderson expects Nvidia's stock price to experience a 35-40% drawdown in the future, he believes this fluctuation is a normal market development and will continue to increase when the drawdown occurs.

In addition, Anderson is confident in the future of generative AI, believing it has great potential in solving autonomous driving, robotics and drug discovery.

Nvidia is firmly leading in supporting and providing these areas.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.