Nvidia's race: does the company have a chance to grow its capitalization to $5 trillion?

Last week Nvidia presented its quarterly report - its revenue and profit exceeded analysts' expectations, and investment bank Oppeheimer even called it «the best company in the best sector». Freedom Holding co-founder Igor Klyushnev discusses whether Nvidia has a chance for further growth;

The other day my wife asked out of the blue: «Is Nvidia really such a cool company?». The question caught me off guard. For those who invest in the U.S. market, Nvidia is long and familiar with its impressive growth over the past decade. But things may look different from the outside, and I thought this company's recent report was a great excuse to explain what the Nvidia phenomenon is all about and why the company will remain one of the best investments in the coming years.

Is Nvidia cool? Of course it is! How else can you characterize the company whose products and technologies have actually made the current revolution in artificial intelligence possible?  

Everyone probably knows that Nvidia has great video cards. But its business spans several key areas, from chips and software for data centers (it accounted for $39.1 billion of its $44.1 billion in revenue $39.1 billion) to GPUs for gamers, imaging systems, and autopilots. 

Jensen Huang has led the company since its inception, and his importance to Nvidia cannot be overemphasized;

The company is just over 30 years old, and it's successfully vying for the title of the largest capitalization in the world. It was Huang who was one of the first to bet on AI, and that visionary decision radically reformatted Nvidia: from fiscal 2021 to 2025, its annual revenue soared from nearly $17 billion to $130.5 billion, with data centers' share of revenue rising to nearly 90%. 

That is, Nvidia has gone from being a maker of graphics cards for gamers to a key supplier of «shovelware» for the AI gold rush.

In fact, Jensen Huang himself both looks cool and is a cult figure for Silicon Valley. He almost always speaks in a black leather jacket, regardless of the time of year or the format of the event, can popularly explain chip architecture to millions of viewers, and Nvidia's presentations are real shows, with lights, music, and staging. There's a reason why the media regularly reports that the head of Nvidia is greeted like a rock star in the tech world. In October 2024, for example, at the AI Summit in India, his speech was sold out of all tickets, and tech enthusiasts spent thousands of rupees to attend the event. And in January 2025, Huang was organizing a dinner for Nvidia vendors in Taiwan (where he himself is from) - and a crowd of his fans gathered in front of the restaurant where the event was held;

Let's get to the main point - can Nvidia's market value, which now is more than $3.3 trillion, increase and reach, for example, $5 trillion? One might shrug skeptically - where can it go any bigger? But I see substantial arguments in favor of such a bullish scenario.

- Nvidia is the main beneficiary of AI

In an era of explosive growth in artificial intelligence, the company is in a unique position as the number one supplier. 

The company controls, according to IDC at the end of last year, more than 90% of the server GPU market. Its hardware is behind literally every AI breakthrough, from chatbots like ChatGPT to image recognition systems;

Demand from cloud data centers is growing at an astonishing rate, with global demand for data center GPUs soaring 154% in 2023, wrote analysts at Freedom Finance Global. 

Nvidia is essentially selling the «bricks» for digital AI factories. Its management estimates that the industry will direct more than $1 trillion over the next few years to retool its server infrastructure for AI - and Nvidia will get a significant portion of that money. The company already has customers lined up for the next few quarters. To meet the rush, Nvidia is negotiating increased production capacity with TSMC and other contractors. 

At the same time, Nvidia is not just a hardware manufacturer, but also an ecosystem creator. It supplies off-the-shelf servers (DGX series), software and cloud services for AI computing. Almost the entire AI sector runs on Nvidia's software platforms like CUDA, a kind of «operating system» for AI developers. By releasing more marginal software and turnkey solutions, profitability is also growing: the company has shown margin expansion across the board in recent quarters. In other words, Nvidia is making the most of the AI boom by monetizing both chips, software, and services. That's the first pillar in the company's giant valuation.

- Nvidia is a leader in autonomous systems and «physical AI.» 

While Nvidia has spent the last couple years leading the world of digital AI (neural network training, content generation, etc.), the company's next big goal is to achieve leadership in real-world AI, or, as Jensen Huang put it, «physical AI.» 

It's about robots, autonomous cars, smart factories - all those technologies where AI comes out of the cloud and into the real world. 

And that's where Nvidia is already making progress. The Nvidia Drive platform has already become the de facto standard for autopilot: it is used by, for example,  Mercedes-Benz and BYD. Autonomous driving is a colossal market that, is projected by Market Research Future to reach $65.3 billion by the end of 2027. Nvidia has firmly carved out a niche as the «brains» for these unmanned vehicles. 

But not just cars: Nvidia is developing platforms for robotics (Isaac software package), and its Omniverse digital twin technology is used by industrial giants (e.g., BMW) to simulate manufacturing processes;

Huang himself is convinced that «physical AI» - is a new phase of development, where machines with intelligence will help in manufacturing, logistics, and urban infrastructure. Nvidia is already building a foothold in this market: according to Huang, who said on the company's corporate blog, factories and plants worth $5 trillion are being built around the world. Nvidia's Omniverse platform for industrial AI is helping to optimize their operation;

«The robots of the future will be diverse, but they will all be powered by artificial intelligence,» said Huang as recently as last year about the coming era. 

-Competitors are still far away.

Of course, with that kind of money at stake, the niche won't stay empty. Major players like AMD, Google, Amazon and Meta are investing in manufacturing their own chips in an attempt to reduce their dependence on Nvidia;

But even its closest rival, AMD, is only preparing its MI300 gas pedals for mass production, and so far it owns only a small portion of the AI chip market (less than 15%). 

And the development of unique chips by cloud giants is a story of more than one year. Meta, for example, has been developing its own AI processor for a couple of years and expects to begin using it no earlier than 2026;

Overall, the trend is clear: Microsoft, Google, Amazon and others are moving toward making their own semiconductors, responding to the frenzied demand and prices for Nvidia GPUs. But these initiatives face big risks and costs, from the need to maintain chipmaking teams to the complexities of manufacturing. But these initiatives face big risks and costs, from the need to maintain chipmaking teams to the complexities of production;

Thus, Nvidia will remain the leader in the coming years. The ecosystem for CUDA programmers, the convenience of its solutions, and the faster pace of innovation create high barriers for competitors. Even if one of the giants brings its chip to market by 2026-2027, the AI sector is so fast-growing that there will be no room for shortages, and Nvidia is likely to retain the lion's share of new shipments. Nvidia will be the leader in the market;

A key risk in assessing Nvidia's future is underestimating the speed at which competition is growing. The example of Chinese platform DeepSeek is a stark reminder of this. Whereas it used to take $10 billion to train a large language model, now a few million dollars is enough. That doesn't invalidate the importance of Nvidia. But the trend is clear: the threshold for entry is sharply decreasing, which means that every major country or technology group will have «its own DeepSeek,» and those who used to be left out are getting in - budgets are no longer an insurmountable barrier.

To summarize: Nvidia has a significant advantage over its competitors, the company is actively developing the promising field of «physical AI» and for the next 2-3 years the company has a head start to consolidate its dominance. Therefore, further growth does not seem impossible;

Do I own shares of Nvidia? I don't own any Nvidia stock myself, but I do hold an ETF on the S&P 500 (ticker SPY), which depends in no small part on Nvidia's performance. In recent years, its impact on the index has become simply enormous. For example, in 2024 alone, Nvidia's Nvidia rally gave more than 22% of the entire S&P 500 gain - neither Apple nor Microsoft contributed that much. It turns out that the index investor is riding Nvidia's «engine» in many ways, even if he didn't directly buy its stock.

Want to hear what Nvidia «sounds» like? Listen to Tour de France Etape 2, a track by Kraftwerk. I liked this track because it has a great sense of the speed of the technology race that Nvidia's progress represents;

In fact, Kraftwerk are very popular in Silicon Valley, electronic music is listened to by Ilon Musk, and Kraftwerk-style music is often used in the design of Nvidia presentations;

Not an investment recommendation