Renowned tech investor James Anderson has made a bold prediction regarding the future potential of NVIDIA Corp. In an interview with the Financial Times, Anderson suggested that the chipmaker’s market capitalization could surpass $50 trillion within the next decade. This projection is based on the increasing demand for AI chips, which are vital for training and running advanced generative AI models.
Anderson, who has previously invested in companies like Tesla Inc. and Amazon.com Inc., believes that NVIDIA’s market cap could potentially exceed the combined value of the current S&P 500. He attributes his optimism to the company’s leading role in the AI chip market and its persistent exponential progress. NVIDIA’s shares have already surged by 168% since the beginning of the year, pushing its market value above $3 trillion.
While Anderson acknowledges the volatility of the path to this potential valuation, he remains confident in NVIDIA’s long-term prospects. He highlights the company’s involvement in solving critical problems in areas such as autonomous driving, robotics, and drug discovery. Anderson projects a sustained 60% annual growth in data center revenue, which could lead to significant earnings and free cash flow per share over the next decade.
The prediction of NVIDIA reaching a market capitalization of $50 trillion would be nearly twice the current GDP of the United States and almost three times that of China, according to data from the World Bank. Anderson assigns a probability of 10-15% to this scenario.
It is worth noting that Anderson’s prediction comes at a time of both excitement and caution in the market. The stock market has experienced a significant rally, driven by the promise of AI. However, some analysts, including Craig Johnson from Piper Sandler, have raised concerns about a potential market pullback and consider NVIDIA to be in “bubble-ish territory.” Even Cathie Wood, CEO of ARK Invest, expects “short-term indigestion” for the company’s business as customers reassess their AI strategies.
Despite differing opinions, Anderson’s track record as an investor and his belief in NVIDIA’s competitive advantages make his prediction noteworthy. His early investment in the company through Baillie Gifford’s Scottish Mortgage Investment Trust played a significant role in its transformation into a standout in the tech investment sector.