Three corporations at present boast a market cap over $3 trillion, and I believe considered one of them will attain the $4 trillion mark ahead of later.
Proper now, there are solely three corporations on the earth with a market cap of not less than $3 trillion. These corporations are Apple, Nvidia (NVDA 4.45%), and Microsoft — every of that are taking part in a serious function within the ongoing synthetic intelligence (AI) saga.
Whereas Apple at present stands within the lead with a market cap round $3.8 trillion, I see Nvidia because the most probably among the many trio to succeed in a $4 trillion valuation first.
I am going to element Nvidia’s tailwinds and make the case why I believe the semiconductor darling has some main upside heading into 2025.
Why Nvidia may attain $4 trillion first
Over the past two years, Nvidia’s enterprise has skilled one thing of a renaissance. Whereas the corporate’s authentic focus was on enhanced graphics efficiency for video video games, Nvidia found that its graphics processing unit (GPU) chipsets may very well be integral for generative AI improvement.
Given Nvidia’s present inroads within the GPU realm, the corporate has confronted little or no competitors since AI emerged as a megatrend a few years in the past. Because of this, the corporate has been capable of command excessive ranges of pricing energy for its chips, which has led to document income and revenue progress for the corporate.
Furthermore, demand for Nvidia’s Hopper GPUs has helped the corporate purchase practically 90% of the GPU market — a development that might truly proceed climbing increased.
In 2025, the narrative round Nvidia goes to encompass on merchandise: the corporate’s next-generation Blackwell GPU structure. Based on trade analyst Beth Kindig, manufacturing of Blackwell GPUs is predicted to triple between the present quarter (This autumn) and the primary quarter of 2025.
Nvidia’s $NVDA Blackwell manufacturing may practically triple by Q1, rising from 250K-300K items in This autumn to 750K to 800K items in Q1 based on Morgan Stanley.
This is a rise from earlier trade estimates for 200K in This autumn and 550K in Q1. https://t.co/J52OPyubsJ
— Beth Kindig (@Beth_Kindig) December 27, 2024
Whereas it is tough to evaluate what these figures will translate to when it comes to {dollars}, I see the rising manufacturing estimates as a superb proxy for Nvidia’s near-term progress.
Though shares of Nvidia gained roughly 170% in 2024, the inventory has taken a breather over the past month or so. I believe one motive for the slight sell-off pertains to the Blackwell launch, as there may be clearly lots using on Nvidia’s capacity to execute and preserve its place as the highest chip enterprise. Ought to the Blackwell launch exceed expectations (which seems seemingly), I believe it is cheap that Nvidia inventory will witness some new life and shares may start hovering as soon as once more.
In contrast, whereas Apple and Microsoft every have catalysts of their very own, such because the iPhone 16 geared up with Apple Intelligence and demand for Azure cloud computing infrastructure, I do not assume both of those alternatives carry the identical upside in comparison with what Blackwell may imply for Nvidia.
Picture supply: Getty Photos.
How a lot upside does this indicate for Nvidia buyers?
Proper now, Nvidia’s market cap hovers round $3.3 trillion. With a view to attain the $4 trillion milestone, Nvidia’s worth would want to extend by roughly 21%.
NVDA Market Cap information by YCharts
Whereas a transfer of this magnitude is definitely achievable, it is essential to remember that Nvidia executed a 10-for-1 inventory break up earlier in 2024. For the reason that firm’s excellent share rely is now increased by tenfold, it is extremely unlikely that Nvidia inventory will expertise a 20% acquire in a matter of only a few buying and selling days.
I believe to ensure that Nvidia shares to rise by one other 20% or extra, the corporate goes to wish to display constant progress round Blackwell and the info middle enterprise as a complete. As such, I believe smaller, incremental strikes will happen in Nvidia inventory all through 2025 as extra data turns into public associated to Blackwell.
Adam Spatacco has positions in Apple, Microsoft, and Nvidia. The Motley Idiot has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
