When OpenAI commercially launched ChatGPT in November 2022, Nvidia (NVDA 1.53%) was worth about $345 billion. A little more than three years later, the semiconductor powerhouse is now worth $4.5 trillion, making it the most valuable company in the world.
While Nvidia has emerged as the king of the generative artificial intelligence (AI) boom thus far, what if I told you the company's epic run was just getting started?
Below, I'll explore a number of catalysts it has for 2026 and break down how the company could notch its next trillion-dollar milestone by year-end.
Image source: Nvidia.
Why 2026 could be another huge year for Nvidia
According to reporting from FactSet Research and Goldman Sachs, AI hyperscalers, including Microsoft, Alphabet, Meta Platforms, Amazon, and OpenAI could have up to $527 billion in capital expenditures (capex) this year.
A few months ago, Nvidia CEO Jensen Huang said that the company's backlog was in the range of $500 billion. However, management was quick to clarify his statement by saying that a portion of this backlog had already been recognized.
Nevertheless, the company's chief financial officer, Colette Kress, recently told investors that the order backlog is growing exponentially. This sounds reasonable considering that Nvidia recently signed a major deal with Anthropic, which will be using the company's new Vera Rubin chip architecture.
Also, Amazon Web Services (AWS) signed a $38 billion deal with OpenAI, which will be renting clusters of Nvidia's GPUs from the cloud provider. And the chipmaker just inked a $20 billion licensing deal with start-up Groq to bolster its inference offerings.
NASDAQ: NVDA
Key Data Points
Precise figures are not known, but Wall Street's optimistic view suggests that Nvidia could generate between $320 billion and $330 billion in data center revenue in 2026.
Using that data center business as a proxy for broader AI capex budgets, it's not unreasonable to forecast the company capturing upward of 60% of big tech's infrastructure spending this year.
Taking this one step further, many of the hyperscalers are entering into multiyear agreements for their data center projects. Against this backdrop, Nvidia is positioned for long-term growth in the AI infrastructure era, gaining further revenue and profit visibility with each new deal signed.
Nvidia's valuation profile looks interesting
The chart below illustrates trends across Nvidia's price-to-sales (P/S) and forward P/S ratios throughout the AI revolution. As it indicates, both multiples have compressed over the last year and are hovering well below prior peaks seen over the last three years.
NVDA PS Ratio data by YCharts.
To me, this could suggest the market is beginning to value Nvidia like a maturing business as opposed to a hypergrowth stock. Below, I'll explain how the company can attain further valuation expansion even as its multiples continue to tighten.
How much will Nvidia be worth by year-end?
Although Nvidia is a diversified business, Wall Street analysts tend to dial in on just one segment: data centers. Over the last 12 months, it has generated $167 billion in data center revenue.
At its current market value, the company is valued at roughly 27 times its trailing-12-month data center sales. Should it execute on its growth plan this year and essentially double those sales, it would be worth almost $9 trillion, assuming its valuation profile stays the same.
Just for argument's sake, let's say the company's ratio between market cap and data center sales compresses closer to its overall forward P/S of 21. At this multiple, the business would be worth about $7 trillion.
The exercise above is simply a fun math exercise, but the key takeaway is that Nvidia is in position to generate further gains this year and beyond, even with its valuation multiples normalizing.
When you measure its growth and influence relative to other contributors to the AI boom in areas such as enterprise software or cloud computing, the company begins to look absurdly cheap.
By the end of 2026, I'm predicting that Nvidia could be worth anywhere between $7 trillion and $9 trillion. At the midpoint of this range, it could be trading for roughly $330 per share, implying more than 70% upside from current levels.
