Nvidia Could Hit $5 Trillion Valuation as AI Dominance Fuels ‘Generational Opportunity, Says BofA

Nvidia may even attain a $5 trillion market capitalization, said Bank of America, mainly due to the vast opportunity in the AI segment, with demand only increasing for its GPUs.

This week, Nvidia’s stock hit a new high, and Bank of America analysts think it can go even higher. Vivek Arya’s company raised its price goal for Nvidia from $165 to $190, which means the stock could go up 37% from its current price of $138. Why? Nvidia has about 80% of the market for AI accelerators, which puts it in a great situation as Alphabet, Meta, and OpenAI increase their investments in generative AI that uses Nvidia’s GPUs.

Why This Matters

The market for Nvidia’s AI technology is expected to grow from $45 billion in 2023 to an amazing $363 billion by 2030, with 75% of that market going to Nvidia. The company could make $272 billion from AI by the end of the decade if this trend continues. To give you an idea, Apple made $204 billion from iPhone sales in 2023.

AI progress at Nvidia isn’t the only good thing going on. Bank of America says that Nvidia has profitable margins that are almost twice as high as those of its trillion-dollar tech peers and strong free cash flow margins of about 50% for the next two years. Nvidia also gets a lot of money from working with big companies like Microsoft and Accenture.

A $4.7 Trillion Valuation?

Bank of America’s goal means that Nvidia will have a market value of $4.7 trillion, which is a lot more than Apple’s $3.6 trillion. This would make Nvidia the most valuable public company ever. Some people think that Nvidia’s stock is too expensive based on traditional measures, but demand for its AI goods keeps people optimistic.

Nvidia, a company that started selling graphics processing units for gaming has ascended to become AI and machine learning hardware king and its founder and CEO Jensen Huang is among the richest people in the world.

As to Nvidia and its future in AI, everything looks fantastic, for its technology is the core of generative AI now. Bank of America remains optimistic saying that the company has extraordinary market share, growth, and profit operation capabilities that will help push the stock further up despite high valuations.