Could be worth 49 trillion dollars, projected James Anderson, one of the most reputable tech investment gurus.
In a decade, Nvidia, a high-tech company and the world’s leading producer of semiconductors (chips) used to train and operate AI models and programs, could be worth 49 trillion dollars, projected James Anderson, one of the most reputable tech investment gurus.
In a report, Anderson wrote that the demand for AI chips is currently growing at 60% annually, and if this rate is maintained and assuming a 5% margin of available liquid returns, following the earnings per share and share price metric, Nvidia’s market capitalization in ten years would reach 49 trillion dollars, practically double the current GDP of the United States, which was USD 27.3 trillion in 2023 according to the Bureau of Economic Analysis (BEA) of the U.S. government, and also higher than the current market capitalization of USD 47 trillion of the companies (including Nvidia) listed on the S&P 500 stock index.
Anderson estimated the probability of Nvidia reaching this capitalization between 10 and 15 percent. So far this year, the company’s market value has increased by 162%, last month surpassing the USD 3 trillion barrier and briefly positioning itself as the world’s most valuable company, temporarily overtaking Apple.
Technology Dominance
The current top 5 companies by market capitalization reflect the dominance of tech companies and the AI boom. The podium is occupied by Apple, Microsoft, and Nvidia, all with values above USD 3 trillion, followed by Alphabet (Google’s parent company) and Amazon in fourth and fifth place.
The combined value of the five largest tech companies is currently USD 14.4 trillion. All are linked to AI, and Nvidia alone accounts for 30% of the S&P 500’s market capitalization increase (almost 18%) so far this year. The sixth position is occupied by a company from a “traditional” industry: the oil giant Saudi Aramco, with Meta (formerly Facebook) and TSMC, the Taiwanese company that preceded Nvidia as the world’s leading chip producer, in seventh and eighth place, respectively.
Taiwanese Jensen Huang, co-founder and current president and CEO of Nvidia, who studied at American universities Oregon and Stanford, says Nvidia is at the center of what he calls a new “Industrial Revolution,” a concept endorsed by Javier Milei and Demián Reidel, head of his Advisory Council. They assign great importance to participating in international events (such as this weekend’s in Sun Valley, Idaho, USA, attended by the president) and to personal interviews with top tech company executives to attract such investments to Argentina.
Visionary
Anderson earned his reputation as an investor and tech guru thanks to his early bets on companies like Tesla and Amazon.
As head of the Scottish Mortgage Investment Fund, one of Baillie Gifford, he helped this Scottish fund manager become a star in the world of tech investments, including early bets in 2016 on the then little-known Nvidia. Last year, the famous investor joined the Agnelli family’s holding (the founders of the automaker FIAT, now head of Stellantis) in launching Lingotto Investment Management, where he manages a fund of USD 650 million, whose largest holding is Nvidia shares.
According to the British newspaper Financial Times, Baillie Gifford’s and Anderson’s investment criteria were heavily influenced by the academic work of Hendrik Bessembinder, who found that over the decades, only four out of every hundred publicly listed companies accounted for all stock market wealth creation.
For Anderson, Nvidia clearly enters that select group, and his data and metrics analysis would make it possible for the company to reach a value of USD 49 trillion in ten years. The tech guru also dismisses that the current boom of the company, driven by AI, can be equated to the dot-com bubble, which ended with a spectacular stock market crash and the bankruptcy of several companies in the early 21st century.
He acknowledges, however, that what might be inflated is the AI boom linked to basic services and tasks, but not the companies aiming to solve “serious issues” – such as autonomous driving, robotics, and the discovery of new drugs – in the next ten years. Nvidia, he wrote, is “calmly but firmly leading the support and provision to these areas.”