While the adoption of artificial intelligence (AI) has fueled stock market growth in recent years, there appear to be cracks in investor confidence. Despite evidence to the contrary, concerns of a bubble and fear that growth will slow have weighed on AI stocks.
AI chipmaker Nvidia (NVDA +2.12%) is one example. The company repurposed its graphics processing units (GPUs) to accelerate AI training and inference in data centers, quickly establishing itself as the gold standard. While the company's relative growth rate has slowed, absolute demand is still enviable.
Just last month, one Wall Street analyst doubled their expectations for Nvidia stock, predicting it will become a $20 trillion company by 2030. Let's look at Nvidia's recent results, why the analyst is one of the company's biggest bulls, and the path to achieve that lofty benchmark.
Image source: Getty Images.
The implementation of AI continues
No matter how you slice it, Nvidia's results have been breathtaking over the past 10 years: Revenue and net income have soared 3,970% and 15,320%, respectively, fueling stock price gains of 21,640% (as of this writing). Striking demand over the past three years has been fueled by the unprecedented adoption of AI, as evidenced by the company's recent results.
In its fiscal 2026 third quarter (ended Oct. 26), Nvidia's results once again reaccelerated. Record revenue of $57 billion climbed 62% year over year and 22% sequentially, while earnings per share (EPS) of $1.30 jumped 67%.
The data center segment continues to be the driving force, as it includes the GPUs used for data centers and cloud computing, with sales of $51.2 billion that surged 66%, clearly demonstrating the continuing demand for AI.
Nvidia's forecast suggests the company's growth streak will continue. Management's fourth-quarter outlook calls for revenue of $65 billion, which would represent 66% year-over-year growth at the midpoint of its guidance.
The relentless upward revisions of capital expenditures (capex) by big tech companies seem to support Nvidia's bullish view. Initial projections for AI spending in 2025 came in at $250 billion, but now it clocks in at $405 billion -- and could conceivably go higher. Estimates suggest even higher spending in 2026.
Nvidia is the dominant player in data center GPU space, commanding an estimated 92% of the market, according to IoT Analytics. As the gold standard for AI-centric GPUs, the company is well positioned to ride the wave of AI capex spending higher.
The road to $20 trillion
Nvidia's market cap sits at roughly $4.3 trillion (as of this writing). The company will have to generate stock price gains of 369% to drive its value to $20 trillion. Nvidia is on track to generate revenue of $213 billion in its fiscal 2026 (which ends in January), according to Wall Street, giving it a forward price-to-sales (P/S) ratio of 20. Assuming its P/S remains constant, Nvidia would need to grow its revenue to roughly $1 trillion annually to support a $20 trillion market cap.
Wall Street is projecting annual revenue growth of 31% for Nvidia over the coming five years. By my calculations, it would take annual revenue growth of 34% to reach $1 trillion in revenue by 2030, so it's already in the ballpark. Furthermore, Wall Street has a history of underestimating the chipmaker, so I'm putting my money on Nvidia.
NASDAQ: NVDA
Key Data Points
I'm not the only one who thinks so. Just last month, Beth Kindig, CEO and lead tech analyst for the I/O Fund, doubled her 2030 market cap expectations for Nvidia to $20 trillion. Her calculations are compelling: Kindig said Nvidia will grow its data center revenue by 36% annually over the next five years to achieve that benchmark: "This is supported by Nvidia's aggressive 1-year product roadmap, an impenetrable software ecosystem through CUDA [Compute Unified Device Architecture], and its evolution into a full-stack AI systems provider. When these elements are modeled together -- alongside the rapid expansion in global AI infrastructure capex -- the path to $20 trillion becomes less sensational and more a reflection of compounding fundamentals."
Kindig's track record is clear, so ignore her at your peril. In 2019, when Nvidia's market cap was only $550 billion, the analyst predicted that it would leapfrog Apple to become the world's most valuable company. Kindig's prediction came to pass in 2024, so her opinion carries considerable weight, in my opinion.
Nvidia stock has a long history of volatility, which will likely continue, so it isn't for the faint of heart.
Fears of slowing AI adoption and talk of a bubble have rattled some shareholders, giving seasoned investors the opportunity to buy the stock at a relative discount. Nvidia is currently selling for just 23 times next year's sales, even though it's expected to increase its revenue by 48% to $316 billion.
Even if Nvidia doesn't reach a $20 trillion market cap by 2030, the evidence suggests the stock will likely be much higher than it is today.
