Let's cut right to the chase: Nvidia (NVDA 6.18%) is on track to become the world's largest company. Think that's going too far? I don't. Here's why.
It's already the world's third-largest company
As of this writing, Nvidia has a market cap of $2.2 trillion, making it the third-largest American company, behind only Microsoft and Apple.
| Company Name | Symbol | Market Cap (in billions) |
|---|---|---|
| Microsoft | MSFT | $3,094 |
| Apple | AAPL | $2,665 |
| Nvidia | NVDA | $2,195 |
| Amazon | AMZN | $1,811 |
| Alphabet | GOOG | $1,761 |
That puts it 'only' $500 billion behind Apple and about $1 trillion behind Microsoft. To put it another way, Nvidia could surpass Apple if its stock were to rally by 23%; it could pass Microsoft if it rallied by 46%.
Why Nvidia could top Microsoft and Apple
Why do I think this will happen? Two words come to mind: Artificial Intelligence (AI). In short, the world has gone head-over-heels for AI. Consider this chart below:
Image source: Getty Images.
According to Statista, the overall Generative AI market stood at $44.9 billion in 2023. By 2030, that figure is expected to rise to $207 billion. Generative AI, which can create images, stories, music, and video, is already upending entire industries. Marketing, software design, and customer service are just a few sectors likely to be transformed over the next decade as generative AI products grow in popularity.
How Nvidia will benefit
In short, Nvidia stands to profit from the AI revolution more than any other company, thanks to its leading share of the Graphics Processing Unit (GPU) market.
GPUs are the 'brains' behind cutting-edge AI applications like ChatGPT and Midjourney. And to build those brains, companies like OpenAI need tens of thousands of GPUs -- often designed by Nvidia.
To sum up, thanks to its commanding place in the GPU market, I think Nvidia can ride the AI wave to the top of the list of most valuable companies in the world.
