In the U.S., there are just three companies that can claim to be members of the trillion-dollar market cap club: Apple ($2.1 trillion), Microsoft ($1.8 trillion), and Alphabet ($1.1 trillion). Nvidia (NVDA -6.80%) came close in 2021 when the company's market cap peaked at $831 billion. However, a year later, the fabless company is worth close to half that at $405 billion after a severe stock market sell-off. 

So can Nvidia reach a trillion-dollar valuation by 2030? It's not impossible, but the company is going into 2023 on the back foot.  

Stumbling out of the gate

Nvidia just launched its most important new products since 2020. The RTX 4000 series of graphics cards (GPUs) were announced in September, replacing the RTX 3000 that launched in September 2020. 

However, the announcement and subsequent launch of the new lineup were marred with controversy. Nvidia led the new series with three models, the RTX 4090, RTX 4080 16 GB, and the RTX 4080 12 GB. Typically, Nvidia graphics card power can be identified by the model number; the higher the number, the more powerful the graphics card. 

However, Nvidia changed that with the announcement of the RTX 4080 16 GB and 12 GB. Consumers expected the cards to be the same, except for the 4 GB difference in VRAM, a difference that is small and of little concern to most users. Nvidia fans later discovered that the RTX 4080 12 GB would be up to 30% slower than the 16 GB version with the same model number.

The ensuing PR disaster eventually led to Nvidia "unlaunching" the 12 GB variant. That left the company with the RTX 4080 16 GB at its starting price of $1,199 as the cheapest 4000 series GPU. Comparatively, the previous-generation RTX 3080 launched at $699, so the price hike left a bad taste in the mouths of consumers. 

The RTX 3000 graphics cards were perpetually sold out for nearly two years after launching in 2020. However, the RTX 4000 launch has been tepid. Demand hasn't been as strong for this generation, and there have already been price cuts abroad.

Additionally, one of Nvidia's biggest competitors, Advanced Micro Devices (NASDAQ: AMD), has just released its graphics card, which aims to directly compete with the RTX 4080 16 GB, the AMD Radeon RX 7900 XTX. AMD's GPU matches the performance of Nvidia's 4080 within 2% for $200 less, starting at $999.

Looking ahead

Despite Nvidia's disastrous start with its new generation of graphics cards, all is not lost. To retain its impressive 78% share of the discrete GPU market, Nvidia will need to change its strategy.

The company has launched its new graphics cards at an unreasonably high price, which consumers have shown they are unwilling to pay. However, it reportedly only costs Nvidia around $300 to manufacture an RTX 4080.

As a result, the company has plenty of room to counter AMD GPU price points and retain its dominance. As it stands, the only thing AMD's new cards have over the RTX 4000 series is value. If Nvidia wants to change that, it can.

Looking ahead to 2030, there will likely be around four more graphics card generations between now and then, assuming Nvidia sticks to the new-generation-every-two-years model it has followed since 2014.

Nvidia's revenue for 2019, the year before it launched its RTX 3000 series GPUs, was $10.92 billion. Revenue for 2020, with the RTX 3000 series launched in September, increased by 53.73% to $16.68 billion. Then after the first full year of the GPUs on sale in 2021, the company hit $26.91 billion in revenue, a 61.4% increase.

This year's generation of graphics cards may not do as well as the last. However, Nvidia's graphics card generations tend to be cyclical in performance. The RTX 1000 series in 2016 was a massive hit, while the RTX 2000 series two years later underwhelmed. Then, the RTX 3000 series once again wowed consumers. 

According to Statista, the GPU market was worth $25.4 billion in 2020 and will increase by 870% to $246.5 billion by 2028. If Nvidia continues on its current trajectory of dominating the discrete graphics card market, which accounted for nearly 59% of its 2022 revenue, it will be on the right track to becoming a $1 trillion-plus company by 2030.