The stock market values Nvidia at more than $2.2 trillion, making it the third-largest public company in the world behind Microsoft and Apple. Enthusiasm for AI is raising the share prices not only of Nvidia, but also of many other tech companies that are believed to be imbued with the technology’s potential, including Microsoft, Meta and Alphabet as well as other chipmakers like AMD, TSMC and Intel.
But the blistering rate of Nvidia’s gains — an increase of about 290% over the past 12 months — has many Wall Street analysts wondering how sustainable this run is. The answer has implications for the entire market.
There are many ways to examine this, including traditional stock analysis, which considers sales, earnings, cash flow, business growth and momentum, and an offbeat approach — asking AI chatbots about Nvidia’s prospects as a stock. The query: How big Nvidia’s market value would be in a decade if the company’s share price kept its current pace. What AI chatbots said amounted to this: Nvidia stock’s sharp rise can’t continue like this for very long.
To their credit, the three AI chatbots — Microsoft Copilot, powered by OpenAI’s Chat GPT-4; Google Gemini; and Anthropic’s Claude 3 — were reluctant to answer the question directly. Just because Nvidia’s stock price is growing fast now doesn’t mean it will keep growing fast, and certainly not over periods as long as a decade, they all warned.
Ultimately, they all came up with the same basic conclusion: The simple laws of compound arithmetic tell us that if the company’s share price keeps rising at its current rate, Nvidia will end up with a market cap in the quadrillions of dollars. One quadrillion dollars is 1 with 15 zeros after it, or a thousand trillion dollars in American parlance.
How big is that? The world economy — the combined size of all of the annual GDPs of every country on the planet — amounted to $100.9 trillion in 2022, according to World Bank. So if Nvidia kept growing at its current annual rate, it would dwarf the output of the entire known economic universe within 10 years.
The Anthropic chatbot calculated that Nvidia would become a $2.8 quadrillion company in 10 years, and then warned: “This is an extraordinarily large number that seems implausible in reality, as it would make Nvidia larger than the entire global economy many times over.” This warning reinforces what traditional valuation measures show. Still, Nvidia is an impressive company. Its products have a great reputation and are in high demand, and it generates enormous, rapidly growing profits.