Nvidia will win the race to a $4 trillion market cap—but the long-term big tech battle might be different, experts say (2024)

A surprisingly resilient economy and profit-filled AI boom are driving the United States’ big tech giants toward a milestone that would have seemed impossible just a few decades ago. Nvidia, Microsoft, Apple have all surpassed the $3 trillion market capitalization mark, and Google and Amazon are following close behind in the $2 trillion range.

Combined, these five tech giants alone are now worth more than $14.5 trillion and make up roughly 32% of the S&P 500. For reference, in 2002, after the dot-com bubble burst, the total market capitalization of every U.S. stock was $11.1 trillion, according to Siblis Research data. Big tech’s performance has been particularly impressive this year, with Nvidia, for example, surging from a $2 trillion market cap to a $3 trillion market cap in under 100 days.

That begs the question: which tech giant will hit the next big milestone, $4 trillion in market cap, first? Some bears argue that big tech companies’ record run of performance can’t continue forever, given their elevated valuations and the slowing economy, while the bulls believe this is just the beginning of a streak of AI-induced wins for big tech.

“I think, a year from now, we [will] have three $4 trillion market cap companies: Nvidia, Apple, Microsoft,” Wedbush tech analyst Dan Ives told Fortune.

He argued that many of his peers on Wall Street continue to underestimate the AI revolution and the health of the U.S. economy. “Unless you have a telescope, you can’t find a recession. And the Fed? Their next move is a cut not a hike. So, to me, all signs are bullish,” he said. “It’s 9 pm, and the party goes to 4 am…the haters will hate, continuing to say that this is a bubble.”

Nvidia

There are, of course, a wide range of views on where big tech companies are headed, but many experts are convinced that chip giant Nvidia will be the first to reach the $4 trillion market cap mark, driven by the seemingly unending thirst for its AI-enabling hardware.

“The first one to get there is likely to be the godfather of AI Jensen [Huang] and Nvidia, because they’re the only game in town—their GPUs are the new oil or gold in the tech world with no real competition,” Ives said.

Nvidia stock has surged roughly 160% year to date and more than 3,000% over the past five years. That’s led some analysts to warn that the tech giant’s valuation has become stretched, and doesn’t account for rising competition in the semiconductor market.

As David Trainer, founder and CEO of research firm New Constructs, told Fortune’s Shawn Tully last month: “Nvidia’s valuation is ridiculous. It’s facing the same curse as Tesla. But when Tesla got profitable, loads of competitors entered the EV space, cutting margins and slowing sales. The same will happen with Nvidia.”

But Ives noted that even though Nvidia’s shares have surged, its revenues and earnings have followed suit. Nvidia raked in a record $26 billion in revenues and $14.8 billion in net income in the quarter that ended this April. In 2021, during the same quarter, the company had revenues of just $5.8 billion and net income of $1.9 billion.

Louis Navellier, founder and chairman of family office Navellier & Associates, also brushed off the competition argument, claiming Nvidia essentially has a “monopoly” on key AI chips which will lead to consistent sales and earnings growth for years to come. “And, you know, Jensen is kind of like the new Elon, he’s got kind of a cult status,” he said, adding that will continue to drive retail investors in the stock.

Nvidia’s market capitalization as of July 5: $3.14 trillion

Microsoft

Microsoft’s booming cloud business and big investment into ChatGPT creator OpenAI have buoyed its shares over the past few years. But it’s the company’s diverse and sustainable revenue streams that will lead it to a $4 trillion market cap, according to Tim Pagliara, founder and chief investment officer of independent wealth management firm CapWealth.

He said Nvidia may briefly touch the $4 trillion milestone first, due to what he called the current AI “mania,” but Microsoft will be the “more sustainable” $4 trillion company.

“They're embracing AI, but they also have just a tremendous number of things in the pipeline. And I know as a small business owner, we just gladly keep paying them more per user per month for everything from Azure to some of the additional add ons that they have created for security and things like that,” he added, referencing Microsoft’s Azure cloud computing business.

Pagliara thinks Microsoft’s big tech rivals have riskier business models as well. Apple is dependent on consumers buying into its new iPhone offerings every few years, and Nvidia is benefiting from a lack of competition in the near term, he said. Meanwhile, Microsoft has multiple avenues for consistent revenue growth from the Azure cloud business and Office 365 to Windows and Linkedin.

Market cap: $3.48 trillion

Apple

When it comes to a longer-term outlook, Apple is high on many analysts’ lists because of its potential to use AI to get customers to upgrade their current phones and lure in more iPhone customers. It may not be the first to reach a $4 trillion market cap, but it will get there soon, these bulls say.

“I think over the next two, three years, the largest market cap that we will see is Apple, because they have 2.2 billion iOS devices,” Ives predicted. “Consumer AI is going to go through the walls for Cupertino—they are only in the beginning of an AI-driven supercycle.”

Louis Navellier was also optimistic about Apple’s future, but he said it will need a few “little breakthroughs” to get more customers to buy new iPhones.

He pointed to new AI tools and the potential for folding iPhones as examples. “I don't know if they're going to announce that in September, but if they do, it will be a $2,500 phone, and it will sell like crazy and send that stock soaring.”

Market cap: $3.46 trillion

What about Alphabet and Amazon?

The Google parent’s market cap is currently $2.36 trillion, leaving it well shy of the $4 trillion mark. Analysts said Alphabet will be able to capitalize on the AI revolution, but its missteps with hallucinations have left it behind, and its cloud business isn’t performing as well as others. However, the search giant is taking talent from its peers in an attempt to catch up, recent reports have shown.

It’s a similar story for Amazon, which just recently passed the $2 trillion milestone, and experts expect it will take time for share prices to nearly double. Wedbush’s Ives argued that Amazon’s cloud business, AWS, has also lost out to Microsoft. “​​I think there was some hubris in underestimating what Nadella and Microsoft are doing, and with the crosstown rivals and in that 2-0-6 area code, it's been a bit of a gut punch for Amazon,” he said.

And when it comes to AI, Amazon is just “behind the eightball” too, according to the veteran tech analyst. However, Ives noted that CEO Andy Jassy has made changes to the company’s cloud business, and with a massive base of customers, Amazon should benefit more from AI moving forward.

To be sure, every tech giant on this list also faces risks. Antitrust regulations, cyber attacks, a slowing economy, and a reduction in AI spending should all be considered. But for now, the bulls remain bullish–and they think you should be too.

“The tech bears with their spreadsheets and valuations will stay in hibernation mode,” Ives said. “But when everyone meets for breakfast at 6 am after this AI party. The bulls [will have] won and the bears just sound smart.”

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Nvidia will win the race to a $4 trillion market cap—but the long-term big tech battle might be different, experts say (2024)

FAQs

What is the long term outlook for Nvidia stock? ›

A reasonable prediction lowers Nvidia's margins to the still-fantastic Microsoft level of 35% by 2031. In that case, we'd zoom forward to $580 million in sales by the close of our seven-year window.

What is the net worth of Nvidia? ›

NVIDIA Market Cap

NVIDIA has a market cap or net worth of $3.10 trillion as of July 5, 2024. Its market cap has increased by 204.79% in one year.

Where will Nvidia be in 10 years? ›

Nvidia over the next 10 years

Nvidia's poor diversification will likely worsen because the data center segment is growing significantly faster than its other businesses. This dynamic makes the company vulnerable to a potential slowdown in demand for AI chips, which is a significant risk over the coming decade.

How much will Nvidia stock be worth in 2030? ›

In a chat with Real Vision that published Wednesday, the analyst touched on another of her predictions, that Nvidia is headed for a $10 trillion market cap by 2030. That would mean a return of over 250% by 2030, she said.

Who owns most of NVIDIA? ›

The ownership structure of Nvidia (NVDA) stock is a mix of institutional, retail and individual investors. Approximately 13.78% of the company's stock is owned by Institutional Investors, 3.94% is owned by Insiders and 82.28% is owned by Public Companies and Individual Investors.

Is NVIDIA in debt? ›

NVIDIA long term debt for 2022 was $10.946B, a 83.53% increase from 2021.

Is NVDA a buy or sell? ›

Nvidia has a consensus rating of Strong Buy which is based on 38 buy ratings, 3 hold ratings and 0 sell ratings. The average price target for Nvidia is $135.81. This is based on 41 Wall Streets Analysts 12-month price targets, issued in the past 3 months.

What will Nvidia stock be worth in 5 years? ›

Multiplying the projected earnings with Nvidia's five-year average forward earnings multiple of 39 suggests that its stock price could hit $2,266 per share (barring any stock splits or other events) after five years.

Is Nvidia a safe long term investment? ›

Nvidia stock's longer-term performance is phenomenal

Over the last 10 years, Nvidia stock has returned 25,431% through June 7. That's more than 100 times the S&P 500 index's return of 230%. Put another way, a $1,000 investment in Nvidia stock a decade ago would now be worth more than $250,000.

What is the future of Nvidia stock? ›

NVDA Stock 12 Month Forecast

Based on 41 Wall Street analysts offering 12 month price targets for Nvidia in the last 3 months. The average price target is $135.81 with a high forecast of $200.00 and a low forecast of $90.00. The average price target represents a 5.87% change from the last price of $128.28.

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