Nvidia could be worth $9 trillion by 2030, says Melius. What risk does he foresee?

The world's most expensive chip maker Nvidia could reach a market value of $9 trillion by 2030, according to an analyst at Melius Research. His forecast is based on the growing demand for computing power for artificial intelligence and the company's strengthening position as a key player in AI infrastructure. At the same time, he warns that there is one risk that long-term investors need to watch out for.

Nvidia could reach a capitalization of $9 trillion by 2030, according to Melius Research analyst Ben Reitzes. His forecast means that in the next five years the market value of the company will more than double, writes Business Insider. In July, Nvidia's capitalization reached $4 trillion.

"I'm not saying they'll achieve that in any particular year. But by the end of the decade, it looks possible," Reitzes said.

- Demand for energy for AI will continue to grow

Power demand for AI will increase by an average of 30 percent per year, and by the end of 2030, power consumption by AI systems will reach 156 gigawatts, Reitzes cites McKinsey data.

- Each gigawatt of demand can generate $40 billion to $50 billion in revenue for Nvidia

The company has already voiced such estimates to investors, Business Insider notes. However, taking into account inflation and other factors, potential annual revenue could grow to $60 billion per gigawatt by the end of the decade, Reitzes suggests.

If power demand growth remains at 30 percent, Nvidia's total annual revenue could reach about $2 trillion by 2030, the analyst said.

- Nvidia to gain significant market share of AI infrastructure market

Reitzes said the company is already working with data center operators and other so-called hyperscalers to take a piece of this segment.

Assuming Nvidia takes 30% of the market, annual revenue could be around $600 billion by the end of the decade, Business Insider writes. Such a figure supports a $9 trillion valuation for the company, Reitzes noted, citing his calculations.

Reitzes' estimates depend on whether industry participants will invest to support AI energy demand. To realize the level of demand he outlined by 2030 would require about $5 trillion in investments, the publication notes.

"Will the industry be able to invest that $5 trillion to unleash the necessary gigawatts and allow Nvidia to become a strategic supplier with $600 billion in revenue by the end of the decade? We think the energy question is something that long-term investors need to ask Jensen [Nvidia founder Jensen Huang]," he said.

Investors, meanwhile, are waiting for Nvidia to release its second-quarter earnings next Wednesday after the close of trading.

"We think the most important thing for long-term investors is to look at energy. Electricity is the main limiting factor," Reitzes added.

Nvidia's securities have gained 31% this year. In trading the day before, Nvidia shares fell by 3.5% during a bigtex sell-off on Wall Street, but at the premarket on August 20, quotes were adding 0.4%. Ahead of the quarterly report, several investment banks raised their target prices on the chipmaker's shares. Morgan Stanley, Cantor Fitzgerald and Mizuho expect Nvidia to beat revenue and earnings expectations due to increased demand for AI computing power and the development of the Blackwell architecture, MarketWatch writes.

Morgan Stanley increased its target on Nvidia shares from $200 to $206, confirming the recommendation "above market" (Overweight). The new forecast assumes a rise in quotes by about 17% relative to the close of trading on August 19.

Cantor Fitzgerald also maintained a positive view on the company's securities, but was more optimistic, with the target price raised from $200 to $240, offering upside potential of about 37% to the Aug. 19 level.

Mizuho raised its share price estimate to $205 from $192, expecting a gain of about 17%.

This article was AI-translated and verified by a human editor