One of the most significant technological breakthroughs of our generation is the development of artificial intelligence (AI). These next-generation algorithms are being used by creatives to generate original content, by businesses to streamline processes, and by developers to write and debug computer code -- and new use cases are being uncovered regularly.
Most AI processing takes place in data centers, and the most widely known names in technology are scrambling to keep up with demand. In fact, the four horsemen of technology, namely Microsoft, Meta Platforms, Alphabet, and Amazon, have announced plans for nearly $400 billion in capital expenditures in 2025, with the vast majority dedicated to the servers and data centers needed to support AI.
The biggest beneficiary of this trend is arguably Nvidia (NVDA 1.65%), which supplies the graphics processing units (GPUs) that provide the computational horsepower that underpins AI. Two Wall Street analysts believes investors don't fully appreciate the opportunity and suggest this will vault the chipmaker's value to $6 trillion by the end of next year.
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A decade in the making
When generative AI burst on the scene in early 2023, Nvidia was vaulted from near obscurity to superstardom, and many viewed the company as an overnight success. However, students of history know Nvidia's accomplishments were more than a decade in the making.
Back in 2013, CEO Jensen Huang realized academics and researchers were using Nvidia's processors to accelerate deep learning and machine learning (earlier branches of AI). Secure in that knowledge, Huang positioned Nvidia for an AI-centric future. When generative AI began to spread like wildfire, Nvidia's GPUs quickly became the gold standard.
These chips utilize parallel processing, which breaks up complex mathematical tasks into smaller jobs, leveraging multiple cores to process the calculations simultaneously. The combination of cutting-edge processors and the proprietary software instructions embedded deep within the GPUs has cemented Nvidia's place as the industry leader -- and has fueled its rapidly growing profits.
The numbers are compelling
In its fiscal 2026 first quarter (ended April 27), Nvidia generated record revenue that surged 69% year over year to $44 billion. Excluding a one-time charge, adjusted earnings per share (EPS) jumped 62% to $0.96. The biggest contributor was the company's data center segment, which houses chips used for AI, cloud computing, and data centers. Revenue for the segment soared 73% to $39 billion, fueled by persistent demand for AI.
There could be much more to come. Global management consulting firm McKinsey & Company calculates that generative AI could increase corporate profits by $2.6 trillion to $4.4 trillion annually over the coming decade.
The road to $6 trillion
Cantor Fitzgerald analyst C.J. Muse recently weighed in on Nvidia's prospects, maintaining an overweight (buy) rating on the stock and boosting his price target to $240. That represents potential upside of 37% compared to Tuesday's closing price and a market cap of $5.9 trillion.
Muse believes investors continue to underappreciate the scale of the data center build-out underway. He estimates that Nvidia will generate data center revenue of $200 billion this year and $300 billion next year, fueling the next leg of its growth.
He isn't the only one. Loop Capital analyst Ananda Baruah has a buy rating and a Street-high price target of $250 on Nvidia stock. This represents potential upside of 42%, which would push Nvidia's market cap to $6.1 trillion over the coming 12 to 18 months.
The analyst predicts that the use of generative AI and widespread adoption of AI factories could generate spending of $2 trillion over the next few years, with Nvidia reaping the rewards.
Furthermore, Nvidia controls a dominant 92% of the data center GPU market, according to IoT Analytics, so the company stands to benefit the most from the rapid growth in the data center space.
Nvidia is already the world's most highly valued company, with a market cap of $4.2 trillion (as of this writing). Despite that and the company's enviable growth rate, the stock is selling for just 29 times next year's sales. Given Nvidia's industry-leading technology, strong execution, and the persistent secular tailwinds, I'd submit that's an attractive price to pay for a company with such excellent prospects.
